On paper the tens of thousands of Palestinians who work inside Israel have the same labor rights as their Israeli peers; in practice, there is a huge gap between what the law says and what happens on the factory floor, construction site or farm field.
Now, after a long delay, a government panel is recommending changes to a clumsy system it says makes it too easy for employers to evade taxes and deprive workers of their rights. Ironically, the plan would reduce the government’s role and place more of the responsibility on the employers themselves.
As of April, some 130,000 West Bank Palestinians were estimated to be working in Israel. About 80,000 of them have permits to work for some 8,100 employers in a variety of sectors, although most are working in construction, agriculture and low-skilled jobs.
The pay is low by Israeli standards, but Israeli employment is an important part of the West Bank economy. Palestinians working in Israel bring home about 5 billion shekels ($1.4 billion) and their salaries, according to the Palestinian Central Bureau of Statistics, are about twice as high as the average for jobs in the West Bank.
The committee, which was headed by Finance Ministry director general Shai Babad, was set up in December 2016 by the government to increase the number of Palestinians working in Israel by making the process of granting permits more efficient and to ensure better labor conditions. Israel’s construction industry, which is perpetually short of labor, lobbied for the changes.
Today, Palestinian workers’ labor rights are poorly enforced. Unlike Israeli workers, their rights are enforced – but only sporadically -- by the Palestinian Employment Division of Israel’s Population, Immigration and Border Authority.
Israeli employers pay net salaries directly to their Palestinian workers, often in cash, which enables the employers in many cases to avoid paying taxes and social benefits at all.
Unlike with Israel workers, social-benefits payments due to them, such as vacation pay, pension set-asides and the like – are paid by the employers to the Population Authority’s payments division – in Hebrew, Matash.
Matash, in turn, transfers the money to the worker’s bank account after it has been validated. But not all the money: Until last January, for instance, Matash transferred money collected for sick days into a government-managed fund. Palestinian workers were in their able to apply get money back that was owed them, but in practice that rarely happened and the fund has accumulated a cash pile of 200 million shekels, according to the committee’s report.
Babad’s committee is proposing to do away with Matash’s role as intermediary for social benefit payments. Instead, Palestinian workers, like Israelis, will be paid their salary and social benefits directly from their employer in nearly all cases. Pension money due them will go directly to a pension fund.
The committee does not recommend that the new system of paying Palestinians begin immediately. Instead it wants to wait till a government company, Correspondent Services Limited, is formed that can transfer non-cash salaries to Palestinian bank accounts.
Officially formed last November, as a conduit for Israeli banks to continue relations with Palestinian lenders without exposing themselves to the risk of money laundering or terror finance charges, the company could also service Israeli employers, too. However, it won’t formally begin operations until 2020.
To ensure employers don’t violate the rules, once Matash is out of the picture, most responsibility for making employers follow the rules will go to the Labor Ministry. The Population Authority’s enforcement of labor rights has been poor.
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