Israel Proposes Slashing Foreign Worker Fees for Small Businesses
Translated & summarized from Bizportal by baba
An Israeli government committee recommends slashing annual foreign worker fees for small businesses by 83%, potentially saving employers tens of thousands of shekels annually. The proposal aims to alleviate labor shortages in key sectors following a reduction in Palestinian workers.
The story in 5 lines · by baba
- Israel proposes cutting foreign worker fees by 83% for small businesses.
- The reduction applies to the first ten foreign workers in firms under 100 employees.
- This aims to ease labor shortages in sectors like restaurants and construction.
- A uniform application fee and prorated annual fees are also recommended.
- The move follows a significant drop in Palestinian labor post-October 2023.
An Israeli government committee is recommending a significant reduction in the annual fees for employing foreign workers, a move expected to substantially lower costs for small and medium-sized businesses. The proposal, put forth by the inter-ministerial committee on foreign workers, suggests cutting the fee for the first ten foreign employees in businesses with up to 100 workers from the current NIS 8,490 to NIS 1,420 per worker, an approximately 83% decrease. For a business employing ten foreign workers, this would translate to an annual saving of around NIS 70,700, reducing the fee burden from nearly NIS 85,000 to about NIS 14,200. This benefit is specifically targeted at businesses with fewer than 100 employees and is capped at the first ten foreign workers, aiming to assist sectors like restaurants, workshops, service industries, and small factories, many of which have increased their reliance on foreign labor since the start of the recent conflict.
The committee also proposes a uniform application fee of NIS 370 per worker across all sectors, replacing the current varied rates which range from NIS 710 in agriculture to NIS 1,420 in hotels. Furthermore, the annual fee would be prorated based on the actual time a worker spends in Israel, preventing employers from paying a full year's fee for workers who arrive mid-year. This initiative comes in response to a significant shift in the Israeli labor market following the October 2023 conflict, which saw a sharp decline in Palestinian workers entering the country. The government subsequently expanded quotas for foreign workers in various sectors to address a reported shortage of approximately 71,000 workers.
While the proposed fee reduction is still a recommendation, its potential impact on business profitability is considerable, especially during a period of ongoing labor shortages. The government has seen substantial revenue from these fees, exceeding NIS 1 billion in 2024 and projected to reach NIS 1.5 billion in 2025, driven by the increased number of foreign workers and the shift of entire industries to overseas labor. However, the total cost for employers extends beyond these fees, encompassing other expenses like housing, health insurance, flights, and recruitment, particularly in sectors like construction where fees and levies alone can reach NIS 23,000 per worker annually before wages and living costs are factored in.
