Knesset Committee Approves New Regulations to Ease Costs for Construction Sector
The Knesset Labor and Welfare Committee has approved new regulations that increase by approximately 50% the wage deductions for foreign workers' housing expenses in Israel. This move is seen as vital relief for the construction industry, a key driver of the Israeli economy, especially amid current economic challenges. The construction sector has undergone significant changes in the past year, notably reducing its reliance on Palestinian Authority workers and now depending almost exclusively on foreign labor.
These structural shifts have made manpower agencies critical in the construction value chain, but the costs of maintaining foreign workers, including rent, municipal taxes, and living expenses, have surged to unprecedented levels. Contractors have borne these costs without substantial tax recognition. Eldad Nitzan, chairman of foreign manpower agencies in construction, explained that previously foreign workers contributed only 300 shekels monthly toward their housing. Under the new regulations, most housing costs will be deducted directly from workers’ wages, significantly easing contractors’ financial burdens.
Currently employing around 75,000 foreign workers, contractors plan to increase this workforce by 40,000 in the near future. The cost reductions are not merely profit improvements but crucial for meeting national project deadlines, preventing contractor bankruptcies, and maintaining sector stability amid economic uncertainty. Shifting part of the housing cost burden to workers aligns with practices in other industries and global markets, enabling contractors to invest more in productivity and advanced construction technologies.
Nitzan praised Knesset Labor Committee Chair Michal Miriam Waldiger, former Labor Minister Yoav Ben-Tzur, and Dovi Amitai, chairman of the Coordination Bureau, for their significant roles in advancing these regulations, which also address additional housing-related costs such as electricity, water, gas, and municipal taxes.
