Israeli Panel Recommends Slashing Foreign Worker Fees for Small Businesses

A committee of director-generals has recommended a significant reduction in fees paid by employers for foreign workers, particularly targeting small and medium-sized businesses. The proposed annual fee for a foreign worker in businesses employing up to 100 people would drop to 1,420 shekels for the first ten foreign workers, a decrease of approximately 83% from the current 8,490 shekels in most sectors. The committee, led by the Prime Minister's Office, also suggests a uniform application fee of 370 shekels for hiring any foreign worker across all industries, a change from the current varied rates.

These recommendations are part of the government's ongoing efforts to lower the costs associated with employing foreign labor. The expansion of foreign worker quotas in recent years, exacerbated by labor shortages following the war and the halt in Palestinian worker entry, has been accompanied by employer complaints about high fees. In 2024, state revenues from these fees exceeded 1 billion shekels.

The committee further proposes altering the annual fee calculation to be proportional to the worker's arrival date in Israel and their actual duration of employment. Currently, employers may be charged the full annual fee even if a worker arrives mid-year or leaves early, a system that has drawn criticism. Some employers have reported being required to pay fees before workers even arrive.

This initiative faces internal government debate, with the Ministry of Finance previously opposing broad fee reductions, arguing they incentivize hiring Israeli workers. The current proposal specifically aims to ease the burden on small and medium-sized businesses by offering the annual fee reduction for the first ten foreign workers employed by businesses with up to 100 employees, intending to reduce employment costs and bureaucratic hurdles.