Israel to Slash Foreign Worker Fees for Small Businesses

A government committee has recommended a significant reduction in the annual fees small and medium-sized businesses pay for employing foreign workers. The proposal, championed by restaurateur Ilan Zagdon of the Restaurants Forum, aims to drastically lower costs for businesses struggling with labor shortages, particularly since October 2023.

Under the proposed plan, the annual fee for the first ten foreign workers employed concurrently by a small or medium-sized business would drop from the current rate of approximately 8,490 shekels per worker to about 1,420 shekels, mirroring the rate in the agricultural sector. This represents a reduction of over 80%, potentially saving businesses around 7,000 shekels per worker annually, or up to 70,000 shekels per year for a business employing ten foreign workers.

The eligibility for this reduced fee would be assessed by the Small and Medium Business Agency based on the business's staffing and specific definitions to be established during the legislative process. Once approved, the benefit would be granted for five years for up to ten full-time, concurrently employed foreign workers.

Additionally, the committee recommends consolidating the application fee for employing a foreign worker to 370 shekels across most sectors. The annual fee would also be prorated based on the number of days the worker is legally present in Israel, preventing employers from paying a full year's fee if the worker arrives mid-year.

Zagdon, who has led the advocacy effort for over two and a half years, expressed gratitude to Finance Minister Bezalel Smotrich for his support but noted that the process is not yet complete, requiring further steps to finalize the regulations. The push for reduced fees is a response to severe labor shortages in sectors like restaurants, exacerbated by the cessation of Palestinian worker entry and ongoing deficits in kitchen and service staff.