Israel to Restrict Foreign Worker Imports, Construction Industry Warns of Price Hikes

Israel's construction sector faces significant disruption as the Population and Immigration Authority announced a new policy halting private recruitment of workers from India and Sri Lanka starting January 1, 2027. These two nations have become primary sources for foreign labor in construction, and future recruitment from them will be exclusively through bilateral channels. Human resource corporations in the sector are strongly opposing the decision, warning it could severely limit their ability to hire skilled workers and drive up employment and construction costs.

The authority cited global concerns over human trafficking in India and Sri Lanka as the reason for stopping private recruitment. However, private hiring will still be permitted from a list of other countries including Uzbekistan, Azerbaijan, Italy, Montenegro, Mexico, Poland, Albania, Ecuador, Brazil, Guatemala, Georgia, Hungary, Vietnam, Portugal, Philippines, Panama, Kosovo, Romania, Thailand, and Turkey.

The "Daf Jadash" association, representing about 160 corporations, argued in a letter to the authority that the bilateral channel cannot meet the industry's needs. They stated that between 2023 and 2024, over 5,000 workers arrived via the bilateral route from India and Sri Lanka, some allegedly lacking sufficient professional experience. In contrast, private recruitment allows corporations and contractors to vet workers in their home countries, conduct practical tests, and provide advance information, shortening the arrival time from 4-6 months to 2-4 months.

Industry representatives also contend that restricting private hiring to other countries, particularly in Eastern and Western Europe and South America, will increase recruitment costs and hourly wages. They estimate that labor demands and recruitment expenses in these alternative countries are tens of percent higher than in Asian nations, suggesting these increased labor costs will be passed on to consumers through higher construction prices.

Additionally, human resource corporations are raising concerns about new regulations regarding reporting employee absences. A recent letter to the authority claims that employers can no longer report voluntary, unjustified absences in the system, forcing them to pay full wages even for such days. The association argues this is a common issue, creating additional costs and disincentivizing regular attendance.

The Population and Immigration Authority responded that the updated list of countries for private recruitment was issued according to a government decision and that private recruitment remains possible within established quotas. They reiterated that the policy change regarding countries takes effect in January 2027, with approved countries still available for private hiring alongside bilateral agreements with nations like India and Sri Lanka, which have available workforces. The authority also stated that approximately 76,000 new foreign construction workers have arrived in Israel since the start of the war, bringing the total number of foreign construction workers to about 90,000, triple the number before the conflict.