From a welfare system to a liberal economy. Since the 1980s, the route taken by Israeli governments has resulted in decades of a politically weak labour force and an economic structure based on significant differences between rich and poor, men and women and ethnic communities. The Israeli form of socialism, acclaimed by Europe in the ‘60s and ‘70s, no longer exists and in its place a free market system has developed. This has contributed to Israel’s ranking among industrial nations as having one of the highest poverty rates at 21% compared to an average of 11%; and a ranking of fifth as one of the countries with the most pronounced social and economic differences between sections of the population.
Assaf Adiv, National Coordinator of the Israeli Independent Trade Union, Wac Ma’an, explains: “The reference year of such a transformation is 1985. The government launched a stabilization program due to hyper-inflation. They opted for the adoption of the free market system. Since that time the State was freed from the responsibility of safeguarding the labour force. Creating jobs was no longer a priority of the government. On the contrary, the priority became to attract internal and international investments. We witnessed a radical liberalisation, a wild privatisation founded on the almost total absence of State regulation”.
Within a few years of this liberalisation policy, the level of unionisation declined from 85% to 30% of the working population. Further, within a decade, the protections afforded workers by collective agreements such as a public, stable pension system and workplace health and safety disappeared to be replaced by employment insecurity, instability, temporary work and the privatisation of the pension system.
One example can be found in the construction sector; once highly, now lightly regulated. Since 2008 and continuing into the present, the construction sector has benefited from a growth in profits of 55% and has absorbed 10% of the Israeli workforce. “What are the reasons for such a result? – Adiv continues – The basis of the housing boom is the almost total cancellation of labour rights. Trade unions have lost control of the companies, fundamental rights have evaporated due to the creation of a system of subcontractors, in which very small firms share out the work and assume direct responsibility over the workers, giving them a very small portion of their proper rights. So, property prices went down, thanks to the wage reduction that weighed almost exclusively on the shoulders of workers”.
Adiv believes that the consequences for Israeli society has been catastrophic; inflating the economic and social gap between the richest and poorest. The ‘socialist’ image of the Israel of the ‘60s and ‘70s has disappeared: “In the past, the egalitarian welfare system was developed at the expenses of the Palestinian population. As a founding element of the Zionist project, the economy was based on the economic and social equality of the Jewish citizens and on discriminations against the Arab communities. Nowadays, this preferential element no longer exists. Through this wild liberalisation, the Israeli political leadership gave birth to a state based on inequality also among the privileged citizens, the Jews”.
This liberal economic policy has also brought together the right and left wing political parties. The Labour Party, which founded the State of Israel and was a significant faction of governments during the first 30 year and being anti-Arab, adopted a structural vision of ethnic inequality which differed from the political ideals of equality found in European socialist parties. In the ‘80s, under the leadership of current Israeli President Shimon Peres, the government, which included the Labour Party, took the decision to move to a market economy which left the labour force without a guiding political force. Adiv explains: “Since the creation of the State of Israel, worker’s right were ‘granted’ by the political leadership. The improvement in the workers’ conditions wasn’t achieved by a labour movement struggle like in Europe. For this reason, as those rights have been lost first of all, though the privatisation of the pension system, no one protested. Everyone was waiting for a change in government policy and a new grant of fundamental rights”.
The Trade Union, Histadrut, was for decades the only organisation representing the labour force. As an off shoot of (and dependent upon) the Labour Party, it played a central role in developing the government’s labour policies. As the backbone of the Zionist project, from the beginning its aim was to recognise the rights and privileges reserved to the Jewish citizens through absolute control of the trade unions system. Histadrut was the only one allowed to sign collective agreements, and until 2011, partially prevented enrolment of immigrant or Palestinian workers.
Yonathan Balaban, a member of the independent Israeli trade union, Koach LaOvdim, says: “The goal of the Histadrut for decades has been to create an Arab-free labour market. Until the ‘80s it enjoyed an absolute monopoly over the union system and operated as a dictatorship. The General Secretary and the internal leadership were appointed by the Labour Party, the government at that time, so it was strictly dependent on the political and economic decisions of the executive”.
Experiences of ethnic communities and women in the work force
One of the central aspects of the Israeli labour market is the systematic discrimination against the Palestinian Arab population. Despite of Labour Laws which extend equal rights and opportunities in employment to Palestinian Arab citizens of Israel, they are unable to enjoy a similar standard of living to their Jewish counterparts.
Palestinian Arabs are excluded from a wide range of employment sectors and earn 30-40% less than Jewish employees. Adiv notes that many Jewish employers do not hire Palestinians for ‘security’ reasons: “You will not find Palestinians at seaports, airports, in electricity or military industries. There are no Palestinian managers of public or private companies and there are very few able to become self-employed. Only 5% of public employees are Arab Palestinians. The only exception is within the health sector. There are a lot of Palestinian doctors and nurses working in Israeli hospitals because the national health system is very advanced and has a great need for professionals”.
The differences in economic and infrastructure development between Jewish and Palestinian Arab communities are also a factor in poor economic and employment outcomes for Palestinian Arabs. With the exception of seven ‘mixed cities’ populated by both Israeli Jews and Palestinian Arabs, the Palestinian Arab population of Israel (20% of the total) live in towns and villages exclusive to them, void of State investment. Further, the majority reside some distance away from industrial, economic and employment areas. They must choose between the expense of commuting or accepting lower level jobs which pay less but are near to home. Balaban cites the example of Nazareth, the largest Palestinian city in Israel, which, like many other Palestinian Arab communities, is not included in national economic planning: “The State doesn’t build industrial zones, cultural and sports centres or universities; and will not allow the expansion of municipal boundaries. It’s a vicious cycle: no infrastructure, no investment, very few work opportunities”.
Women, too, suffer discrimination. The employment rate among Israeli Jewish women is 55% and 25% among Palestinian Arab women. Only 5% of Israeli Jewish public and private managers are women. Further, Israeli Jewish women only earn 33% of an average salary of a man doing a similar job. Balaban notes that a number of social structural factors inhibit a woman’s ability to enjoy equal access and pay; and that they are often consigned to traditional female roles such as nursing, caretaking and teaching.
Finally, the immigrants workers. During the Second Intifada, in order to compensate for a decrease in Palestinian workers employed in Israel from the West Bank and Gaza, Israel opened its borders to workers from Asia and East Africa. Balaban states that this immigrant population live and work in conditions which can only be described as dire: “They work 16-17 hours a day and in return they get the minimum wage of about 500 euro. Often employers withhold their passports to prevent them from moving to a better job or to open disputes in the courts. They live in small apartments, overcrowded, in the peripheries of Israel’s major cities. They live in constant fear of deportation; those who lose their jobs immediately lose their residence permit. And those who arrive legally with a regular employment contract, after a few years lose their residence permit and so become illegal”.
The Israeli “dream” of equality is today the basis of the pyramid of the privileges, dividing the first class citizens from the second and third ones.