Israeli Construction Leaders Declare 'Economic Death Sentence' Over Foreign Firm Expansion

Leaders of Israel's construction and renovation sector are launching a campaign against the Ministry of Construction and Housing's plan to expand the operations of foreign construction companies. They argue that this move, which aims to ensure continuity in the sector, will effectively 'exterminate' small and medium-sized Israeli businesses, increase the black market for labor, and deepen reliance on foreign entities.

In a letter to Minister Haim Katz, industry representatives warned that the proposed expansion constitutes an 'economic death sentence' for the local sector, which has already been struggling with labor shortages and rising material costs. They contend that foreign companies operate in closed systems, import their own labor and materials, and do not transfer professional knowledge to the Israeli economy, creating a 'state within a state'.

The Ministry of Construction and Housing recently issued a call for additional foreign construction firms to participate in projects, requiring them to have strong financial and technological standing. These selected companies will be authorized to manage residential projects exclusively for five years, with an option for an additional three-year extension, and will be obligated to build hundreds of thousands of square meters.

Concerns are also raised by Mazal Golan, chairwoman of the Construction and Allied Industries Workers Union, and the 'Daf Chadash' association, representing licensed manpower corporations. They argue the decision is based on outdated pre-war realities and that the current market conditions, including the influx of tens of thousands of workers through parallel channels, necessitate extreme caution. They also point to data indicating high rates of workers absconding under the foreign execution company model, leading to illegal residency and fueling the black market.

Industry leaders are urging Minister Katz not to approve the decision, warning it will devastate the livelihoods of thousands of Israeli professionals and workers and make the national construction sector entirely dependent on foreign actors. The Union of Renovation Contractors has vowed to continue fighting the plan to protect the local industry.