The Labor Market in Israel Flexible, All Too Flexible

by Yonatan Preminger As change sweeps through global job markets, a debate is underway about the effect on workers. Are they benefiting? Or is work becoming less secure, with lower...

As change sweeps through global job markets, a debate is underway about the effect on workers. Are they benefiting? Or is work becoming less secure, with lower wages and the loss of hard-won rights?

At the heart of the debate are nonstandard work arrangements. These include any position that does not fit the traditional view of a secure job with regular wages, holiday pay, and sick leave, as well as pension and national insurance contributions. Part-time, agency and contractor work, temporary positions and self-employment, all come under this heading.

Presenting a facade of impressive economic growth, Israel is heavy on nonstandard arrangements, especially the use of personnel (“manpower”) agencies. These hire workers, place them in companies and pay them. They stand between the worker and the company for which the work is done. The resulting “triangular employment relationship” creates a gray area in which agency workers can easily be exploited.

Israel in a changing global economy

Today’s global economy differs greatly from western economies thirty years ago. As an ILO publication from 1999 puts it: “Economic globalization and technological innovation are now exposing enterprises to harsh competitive pressures… The competitiveness of an enterprise or economy in the globalized market depends largely on its ability to adapt to changes in markets… it is widely believed that, to enhance this ability, the labour market must be made more flexible.”1

Among western economies, a huge increase in the number of agency workers during recent years reflects a belief that they fill a gap that cannot be met any other way. A residual group of those who don’t have permanent work is ideal for emergency labor shortages, seasonal fluctuations and special projects. The trend toward matching such people with ad hoc jobs is often referred to as the “casualization of labor.”

Israel too has undergone these changes. Today it boasts an open, deregulated economy in line with most western countries. While the efforts to liberalize its economy can be traced back to the Emergency Economic Stabilization Plan of 1985, the most significant changes for its labor market occurred in the 1990s: its general federation of labor (Histadrut) was transformed and weakened; there was massive importation of foreign workers; and labor was casualized.2

Personnel agencies have a major role in the casualization of labor. The proportion of agency workers in Israel is higher than elsewhere in the West. A conservative estimate for 2002 is 110,000 or 5% of all employees, compared to 2.5% or less in Europe and the US.3 A study in the year 2000 put the figure higher, with almost 10% of the workforce in precarious employment.4

The state is the largest employer of agency workers. In the late nineties, as part of its liberal drive, the government put on a show of reducing the public sector by laying off civil servants. In 1996 there were 69,000 public employees. By 2002, the number had fallen to 55,073. The reduction was largely a sham: agency workers took up the slack.

A brave new flexible market

Theorists praise the new flexible labor market, pointing out the benefits for employees. Diana Furchgott-Roth, for instance, wrote the following in the Sunday Times about the French students’ demonstrations in March 2006: “What they don’t seem to realize is that additional labour market flexibility would actually help young people… Employers who can sack easily will also be quick to hire.”5

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