Israeli Cabinet Plan to Let High-tech Companies Hire Palestinian Workers

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Palestinian high-tech workers in Ramallah.
Palestinian high-tech workers in Ramallah.Credit: Ofer Vaknin

The government is expected to vote on a plan to employ Palestinian workers in Israel’s high-tech this week, Haaretz has learned. The plan includes a quota of up to 500 Palestinian workers, similar to quotas for other industries, and the employees will be able to work from Israel if need be.

Under the plan, which will be implemented over three years, these workers will have to earn a wage of no less than 150 percent of the average salary in Israel. Such a quota will not completely solve the tech worker shortage currently facing Israeli high-tech, but the plan is expected to whet the appetite of Israeli employers, as well as helping to advance the ailing Palestinian economy.

The plan is being promoted by the Regional Cooperation Ministry, along with the defense, finance, interior and science, technology and space ministries, among others; the treasury has been dealing with this particular issue for several years. The plan will be brought for cabinet approval alongside another plan to increase quotas for Palestinians employed in the industry and service sectors and at the Atarot industrial park.

Israeli companies already hire Palestinians from the West Bank and Gaza; over the past few years, more Palestinians have been employed by Israeli firms or by foreign development centers operating in the country. They number an estimated 1,000 workers, and are employed via outsourcing, by creating legal entities in the West Bank, or as freelancers.

The quota set in the plan is small compared to the number of Palestinians already working in Israeli high-tech. This raises the question of whether the plan formalizes the status of those who are already employed in the field, or aims to increase their numbers.

Connecting economies

The government held an internal debate on the quota, with the intent at first of setting a higher figure of 1,000-1,500 workers. Their concern is that hiring more Palestinians will harm the employment prospects of Israeli groups currently underrepresented in high-tech, such as the Haredi and Arab communities. Just a few percent of high-tech employees hail from these communities, and integrating them into the sector may help the populations’ socio-economic conditions.

But sources in the high-tech industry believe that hiring Palestinians will replace labor outsourcing to Eastern European countries, rather than affecting Israeli populations. Either way, the government has decided to carry out the move gradually, so it can assess its impact. According to the proposal, the allocation of quotas will be done in three phases – up to 200 workers over the coming year, doubling that number in 2023, and increasing it by 100 in 2024 – for a three-year trial period.

It was further decided to establish an inter-ministerial team, led by the Regional Cooperation Ministry, to examine the impact on Israeli high-tech-tech, the demand for Palestinian workers and the effect on Israeli high-tech-tech and the PA economy during the trial period. The team will present its findings and recommendations to relevant government ministers each year.

Regional Cooperation Minister Esawi Freige told Haaretz that “Israelis and Palestinians live in a single geographic and economic space, and we must strengthen the cooperation and interrelations between citizens and economies. Taking in high-tech workers is part of the desire to connect the economies in all sectors.”

He added, “The move seeks to open the gates not only to low-wage industry and service workers, but also to white-collar workers in high-tech, which suffers from a severe shortage of professional manpower. Another result we hope to see is growth in the return on higher education in the Palestinian Authority and the strengthening of its high-tech sector, so that it can serve as a significant engine of growth for the Palestinian economy.”

Palestinian hi-tech workers in Ramallah, in 2012.Credit: Ofer Vaknin

Palestinian employment hasn’t taken off

Today, the largest high-tech employers of Palestinians are Nvidia, which “inherited” them as employees from Mellanox, which it purchased; as well as Nokia, Cisco, Cadence and HP-Indigo. Among Israeli companies are Cato Networks as well as Wix, which holds limited operations in the West Bank.

Mellanox founder Eyal Waldman is considered one of the pioneers in employing Palestinians; he encouraged other CEOs to do so as well. In the past, Waldman told Haaretz: “It’s good for the Palestinians. There are people there who graduated from universities and they’re unemployed, and it’s here, right around the corner. The more it helps their economy, the more it helps us.

"There are 25-year-olds there who’ve never spoken with Israelis, and suddenly they’re talking about soccer and other stuff, and it leads to good things. Suddenly it’s not the demon on the other side. If thousands of Palestinians are employed by Israeli firms, things will be much better. The PA has Cisco and other foreign companies, but I think there’s different significance for an Israeli company, not an American one, being there.”

However, the initiative has not gained momentum among Israeli companies. The severe labor shortage has led them to employ many workers in Eastern Europe. Recently, Science Minister Orit Farkash-Hacohen initiated the import of thousands of foreign workers. Farkash-Hacohen’s plan is geared mainly towards encouraging Aliyah by Jews, and also towards visa-based employment of foreign experts.

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