Employment Among Israeli Arabs

A Document Prepared by IDI's Arab-Jewish Policy Forum

Employment of Israel's Arab citizen is one of the major challenges facing Israeli society and the Israeli economy. The percentage of Arabs in the labor market is lower than that of other groups in Israeli society and is among the lowest in the world. Because this discrepancy is based on national-religious schisms, raising the Arab employment rate has important economic, social, and political-national implications. Find out more about this issue in this report, which was submitted by IDI's Arab-Jewish Forum to the Committee for Socio-Economic Change headed by Professor Manuel Trajtenberg.

Arab citizens of Israel account for approximately one-fifth of the population of the State of Israel, and Arab employment constitutes a major challenge for Israeli society and the economy of the State. The percentage of Arabs in the labor market is lower than that of any other group, and in fact the employment rate of Israeli Arabs is among the lowest in the world. Because this discrepancy overlaps with national-religious schisms, raising the Arab employment rate and closing the gap between Arab and Jewish citizens of Israel has important economic, social, and political-national implications, as noted in reports published by the Organization for Economic Cooperation and Development (OECD).

Economically speaking, the under-employment of Israeli Arabs translates into a potential loss of NIS 31 billion to the country's GNP. On the social-economical level, the difficulties the Arab citizens face on the job market are a central factor in the economic disparity between Jews and Arabs—among the largest in the OECD countries—and to widespread poverty among the Arab population. Statistics show that approximately half of Arab families in Israel live below the poverty line (after taxes and transfer payments)Jabareen, Yosef, The Employment of Arabs in Israel: The Challenge of the Israeli Economy, 18th Caesarea Forum, 2010.

From a national-political point of view, the under-employment of the Arab national minority can have far-reaching consequences for this population's attitudes towards State and Israeli institutions. The large and now-growing gap between Jews and Arabs engenders a chronic sense of injustice and alienation among the Arab citizens, directed at the State and Israeli society. At the same time, Jewish-supported organizations which receive media coverage have been issuing racist diatribes, impelling businesses not to hire Arabs. The temperate response of the State and Israeli society to this campaign has served to exacerbate existing rifts.

The current situation is also problematic from the perspective of distributive justice, as it contravenes many social values that are fundamental to the State and Israeli society. An equitable workplace-integration policy and the creation of employment opportunities for the Arab population will have numerous positive ramifications and lead to:

  • Greater social solidarity and make a significant contribution to fostering Jewish-Arab coexistence, both on the individual and collective levels.

  • Establishing economic interdependence for the benefit of all.

  • Building trust between members of the Arab and Jewish populations.

  • Decreasing political-national tensions.

Arab participation in the Israeli labor market is characterized by a number of distinctive phenomena, which also serve as the background to the problematic situation and to the yawning gaps between the Arab and Jewish population. These include:

  • The percentage of Arabs who participate in the Israeli labor market is low: approximately 41% as opposed to 59.6% among Jews. The discrepancy between Arabs and Jews is particularly marked among women. Only 21.1% of Arab women are hold a job—one of the lowest rates in the world—as compared to 57% of Jewish women.Central Bureau of Statistics. 2009. Statistical Abstract of Israel 2009. The small percentage of Arab women in the labor market cannot be attributed to cultural factors alone. The percentage of working women in many Arab countries, e.g. Qatar, Jordan, Egypt, and Lebanon, is higher than in Israel. In addition, when surveys ask Arab women about the principal factors preventing them from going out to work, 58% of respondents state that the main reason is a shortage of jobs. Israeli Arab women express their desire to enter the workforce, and 42% of the unemployed respondents said that they would be willing to begin working immediately.Jabareen, Yosef, supra note 1.

  • Just as the employment rate in the Arab population is lower than that in the Jewish population, the unemployment rate among Arabs is higher than among Jews, 8.5% versus 7.4%.Central Bureau of Statistics. 2009. Statistical Abstract of Israel 2009.

  • Arab workers are often concentrated in low-paying sectors of the economy, such as construction, agriculture, and industry for men and education and healthcare for women. As rule, Arabs do not hold positions in higher-paying fields, e.g. high-tech, finance, and electronics. In 2005, for example, 18.2% of Jews employed in Israel worked in banking, insurance and finance, and business services, as opposed to 7.8% of Arabs; approximately 10% of Jewish workers were employed in the high-tech industry, as opposed to 2.8% of Arabs. Approximately 36% of Jewish women were employed in education and healthcare, as were 58% of Arab women. While 28.1% of Jewish men in the workforce held jobs in construction, agriculture, and industry, 43.3% of male Arab workers were employed in these sectors.Jabareen, Yosef, supra note 1. The employment of Arab men in construction, agriculture, and industry has two ramifications beyond the fact that their wages are low: (a) they retire at a relatively young age because of the physical demands of the job, and (b) they are more susceptible to economic downturns and to the entrance of foreign workers into the job market.

  • An examination of the average wage earned in Israel and an intra-sector comparison of wages point to significant discrepancies between Jews and Arabs. The average hourly wage paid to employees is NIS 52.8 for Jewish men, NIS 31 for Arab men, NIS 41.3 for Jewish women, and NIS 33.3 for Arab women.Central Bureau of Statistics. 2009. Statistical Abstract of Israel 2009.

  • In last few years, there has been a dramatic increase in the educational level of the Arab population, but no parallel increase in Arab employment opportunities. A high percentage of Arab university graduates—both men and women—are unable to find employment in their fields and some 13,500 Arab university graduates (10,000 of whom are women) are not employed at all. It is estimated that in five years, some 30,000 university-educated Arabs will be unemployed.Jabareen, Yosef, supra note 1. It comes as no surprise that this situation fosters frustration and its attendant consequences.

  • Analysis of the employment rate and the positions filled by Jews versus Arabs shows that the discrepancies between Jews and Arabs are not limited to the private sector; the same inequity characterizes the public sector. At the end of 2009, 6.97% of Arab workers were employed in the public sector, most with low-level, sectorial jobs with little influence on decision making. The percentage of Arab employees was even lower in the public authorities and certain government corporations. Only 3% of the employees of the Israel Land Administration and the Courts Administration are Arab.Haider, Ali. 2010. The Equality Index for Jewish and Arab Citizens in Israel. Israel: Sikkuy (The Association for the Advancement of Civic Equality in Israel). According to the Or Commission report, the low percentage of Arabs employed in the public sector—and in particular, the almost total absence of Arabs from government policy-making offices—is the unmistakable effect or expression of employment discrimination against members of the Arab population. Haider, Ali, supra note 8.

  • Sikkuy (The Association for the Advancement of Civic Equality in Israel) examined three main indicators of employment inequality: the rate of participation in the work force, the unemployment rate, and specific characteristics of the employees. All three measurements indicate that employment inequality between Arabs and Jews has been on the rise since 2008.Haider, Ali, supra note 8.

  • The acute shortage of industrial zones in Arab towns and villages is a decisive factor in limiting the development of employment opportunities for members of the Arab population. Only 2.4% of the industrial area in Israel is located in Arab towns and villages. In the North of the country, for example, the average industrial zone is 550 dunams (136 acres) in the Jewish local authorities, as compared to 76.9 dunams (19 acres) in the Arab local authorities, i.e. a ratio of 7:1.Jabareen, Yosef, supra note 1. Despite repeated promises on the part of the Israeli government, requests from Arab localities to establish new industrial zones, whether alone or together with nearby Jewish localities, have not been granted.

  • Coupled with this objective data is the strong sense among Arabs that they are victims of employment discrimination. Almost one-third (29%) of Arab job seekers report that they have been denied a position because they are Arabs and 61% of the Arabs surveyed were of the opinion that there is employment discrimination against Arabs as a group.Handels, Shuki. 2010. The Sense of Discrimination of Job Seekers and Employees and What the Public Thinks on the Subject. Israel: Research and Economic Administration of the Ministry of Industry, Trade and Labor

  • There is a contradiction in the positions taken by employers. While 79% of employers in Israel agreed with the statement that the Arab population of Israel has the right to equal treatment in the labor market, the majority of respondents (53.5%) expressed the opinion that their business would not run better if they were to hire people with different ethnicities and from different backgrounds.Special Surveys. 2010. Israel: Research and Economic Administration of the Ministry of Industry, Trade and Labor.

Israel is not the only country to deal with the problem of disparities in the labor market between different social groups, against the background of a national-religious conflict. Northern Ireland, South Africa, and Canada are in a similar position, and Israel can learn a great deal from the successful experience of these three countries.

  • Requiring employers to implement a program of affirmative action to monitor the composition of the workforce with regard to certain characteristics (e.g. gender, religion, nationality) and to submit an annual report on this data. If certain groups are underrepresented, the employer must propose a strategy to eliminate any barriers to employment equality. This type of requirement has been in effect in the United States since the early 1960s, under the terms of the Federal Contract Compliance Program. In the 1980s, Canada instituted the Canadian Federal Employment Equity Act, requiring all large employers to engage in affirmative action; a decade later, Northern Ireland followed Canada's lead with the Fair Employment Act. The government of South Africa legislated the Employment Equity Act in the late 1990s.

  • Establishing a strong and independent Employment Equity Commission, which will enforce anti-discrimination laws and assume responsibility for seeing that affirmative action is used to promote equitable employment. The exceptionally successful Equality Commission for Northern Ireland has 120 employees, responsible for a country with less than two million residents. This completely independent body does not only enforce the law by lodging legal claims, but also takes a very active stance towards employers. Its activities include receiving and analyzing reports about the breakdown of employees in Northern-Irish companies; entering into affirmative-action agreements; overseeing implementation of affirmative-action programs; and providing support through guidance, training, and consultancy services. Empirical research conducted in 2003, designed to examine the effectiveness of the commission's intervention measures, indicated that the composition of the work force had changed significantly in those companies that had received support and oversight from the Equality Commission. McCrudden, Christopher, Robert Ford, and Anthony Heath. 2004. “The Impact of Affirmative Action Agreements.”  In R. D. Osborne and Ian Shuttleworth (eds.). Fair Employment in Northern Ireland: A Generation On, Britain: Blackstaff Press, pp. 124-150; McCrudden, Christopher, Raya Muttarak, and Anthony Heath. 2009. “Affirmative Action without Quotas in Northern Ireland.” The Equal Rights Review 4: 7-14. During the past two decades—during which Northern Ireland has enforced a policy of affirmative action for employment—the country witnessed a significant change in the composition of its work force. Catholics, a group previously discriminated against, were employed in significantly greater numbers in all three principal sectors of the economy, namely public service, industry, and services.  The economy of Northern Ireland as a whole became better integrated.Agócs, Carol and Bob Osborne. 2009. “Comparing Equity Policies in Canada and Northern Ireland: Policy Learning in Two Directions?” Canadian Public Policy 35: 237, 250-1. In most of the public service sector, the percentage of Catholics is similar the percentage of Catholics in population as a whole (almost 40%), and there has been a significant increase in the number of Catholics occupying senior administrative positions.Russell, Raymond. 2004. "Employment Profiles of Protestants and Catholics: A Decade of Monitoring."  In R. D. Osborne and Ian Shuttleworth (eds.). Fair Employment in Northern Ireland: A Generation On. Britain: Blackstaff Press, pp. 24-48 In the past, the vast majority of private companies had approximately 90% of employees of one religion and 10% of the other; today the ratio is closer to 60:40.Herring, Cedric. 2009. “Does Diversity Pay?: Race, Gender, and the Business Case for Diversity.”  American Sociological Review 74: 208-224.

From the experience of Northern Ireland, Canada, and South Africa, we posit that the conditions that lead to more effective and successful affirmative action in the workplace are:

  • A strong commitment on the part of the government for implementation, with government backing for the allocation of substantial resources for the oversight, and enforcement of these policies

  • The establishment of an affirmative-action program based on religion (in the case of Northern Ireland) or nationality (in the case of Israel), with no import given to other characteristics. The rationale for this strategy is that religious and/or national affiliation can give rise to tensions and political instability—not that discrimination by religion or nationality is more egregious ethically or more common in terms of numbers. Another advantage is that employers find it easier to implement a policy that focuses on one characteristic alone.

  • The integration of an affirmative-action policy with a holistic program touching on areas such as education, housing, and healthcare.

  • The publication of studies that underscore the economic advantages to the employer from a diversified workforce. Research of this type can make an important contribution to the campaign to promote equal employment. A case in point is an American study of the economic benefits of diversifying the workforce, conducted among a representative sample of business enterprises, which found that greater racial diversity served the companies in seven ways, e.g. higher income from sales, more clients, a larger market share, and higher relative earnings.Herring, Cedric. 2009. “Does Diversity Pay?: Race, Gender, and the Business Case for Diversity.”  American Sociological Review 74: 208-224.
  • The government of Israel should issue a normative statement expressing its commitment to the promotion of equal employment for the Arab population of Israel, in both the public and private sectors. This statement must be accompanied by operative decisions to be effective immediately, so that the implementation of this policy in the public sector will lead the way for its implementation in the private sector. A public relations campaign on the subject will be designed to foster an atmosphere supportive of change.
  • The Equal Opportunity Employment Commission should be given the power and status necessary for it to be perceived as a significant player in the eyes of employers and interested parties. This suggestion is based in part on the experience of Northern Ireland and the recommendations of the OECD. The greater authority of the commission should be expressed by an increase in its staff (today it has only seven employees) and in its being given control over a larger budget. It is vital that the commission be granted greater autonomy, by taking it out of the Ministry of Industry, Trade, and Labor and making it independent. This will allow it to operate more effectively in enforcement, oversight, and consulting in the public sector and government offices alike. The status of the commission can be significantly altered without enacting new legislation, by means of a joint decision of the Minister of Industry, Trade, and Labor, the Ministry of Finance, and the Civil Service Commission.

  • The country should establish a comprehensive employment policy, which will (a) call for the gradual introduction of affirmative action in the workplace and (b) grant recognition and incentives to employers who hire Arab workers. The size of the incentive will be commensurate with the position offered, with the largest incentives for the most senior positions. Initially, the public sector, government corporations, and companies that participate in government tenders will be required to institute an affirmative-action program; at a later date, if and when needed, large private sector employers will be subject to the same obligation. Dovetailing with this, Israel should impose a more stringent enforcement policy and harsher punishments for employment discrimination and for participating in racist public campaigns imploring employers to refuse to hire Arabs.

    • Taking proactive steps to immediately implement the requirement that the Arab population be properly represented in the civil service, as established in Section 15 of the Civil Service Law (Appointments). Government decisions on this subject have not yet been implemented, and the authorities must take action to guarantee that Arab citizens of Israel—and in particular, Arab women—will be employed in the civil service. Possible measures and strategies were discussed at length by the relevant Parliamentary Inquiry Committee.
    • Instituting the requirement of proper representation in government corporations, not only at the level of directors, but for employees at all echelons. Monitoring of the workforce and a pro-active equitable-employment program will be necessary if the country is to reach this goal.

    • Introducing affirmative action in private companies that bid on government tenders, companies that receive government grants, and officially approved companies. These companies will be required to engage in oversight, to submit reports on the composition of their workforce by nationality (preferably only by nationality, so that the picture is not complicated by characteristics such as gender, age, and physical or mental disabilities), to analyze instances of under-representation, and to draw up a pro-active program to eliminate any potential hurdles standing in the way of the employment of Arab citizens. The report on the composition of the work force and the proposal for job-place equality will be submitted to the Equality Commission. This commission will oversee the process; advise employers about how to design and implement the programs; and monitor the results in the field— subject to its receiving additional authority, manpower, funding, and independence. A company that does not submit a report as required or does not implement the affirmative-action program (including senior positions in the company), will not be entitled to participate in future tenders, will have its grant rescinded, and so on.

    • Implementing a policy of more stringent enforcement of the labor laws that relate to employment equality for Arab workers and harsher punishments for employment discrimination and for publicly urging employers to refuse to hire workers from a certain national background.

    • Providing graduated economic incentives for companies which take in new Arab workers for a minimum period of a year, with larger incentives when Arabs are hired to fill more senior positions. Special incentives should be offered for hiring Arab women. Possible incentives include tax breaks and defraying the cost to the company through a grant of 25% or more of the worker's wages, in accordance with the worker's position in the company.

    • Awarding public recognition for large companies that appoint Arabs, and especially Arab women, to senior positions. One option is to establish a prize (such as the Prime Minister's Award or the President's Award) for employers who meet these criteria, to be bestowed in annual state ceremony.

    • Examining the progress that has been made in the private market. If the requirements and incentives do not bring about the desired results during the time allotted, it will be necessary to gradually introduce affirmative action in the private sector as well. This will be done according to company size, with large companies first in line.
  • Creating a suitable physical and business environment with industrial and business zones in the Arab communities. This will be achieved by significantly enlarging the amount of land zoned for industry, trade, and manufacturing in the Arab local authorities, through (a) promoting the plans that have already been submitted to the planning committees but have yet to be approved, (b) providing assistance with the implementation of approved plans, and (c) proposing new plans. The purpose of these actions is to substantially reduce the dramatic gaps between the Jewish and Arab local authorities within a few years.

  • Working to create more employment opportunities for Arab citizens in their place of residence, by amending the new law included in the Economic Arrangements Law (2009) and the subsequent government decision with regard to national priority areas. The amendment must guarantee that the Arab localities in the Triangle region, the Galilee, and the Negev will effectively be included in the list of national priority areas, by establishing clear and binding criteria. The law should be amended in the spirit of the decision handed down by the High Court of Justice in 2006 in the matter of the Supreme Supervisory Committee, prohibiting discrimination against Arab localities in this matter.

  • Establishing a public committee, headed by a Supreme Court Justice Emeritus, to deal with the numerous instances in which Arabs cannot be hired for a particular job because they are not veterans of the I.D.F. or do not have security clearance. The members of the committee will hear from the General Security Service about the current situation and the criteria the G.S.S. uses for determining what level of security clearance a person must have in order to hold a certain position. The committee will examine the current criteria, make recommendations about how to minimize the current barriers to Arab employment, and propose a strategy for increasing transparency. It will be prohibited to refuse employment to Arabs on the grounds of security which are not in accordance with the arrangement. After the committee's recommendations have been published, attention will focus on education and outreach and on ensuring that the necessary legal steps are taken to properly enforce these recommendations.

  • Motivating employers to voluntarily hire workers from different ethnic backgrounds, based on the economic advantages a diverse workforce brings to the Israeli employer, as demonstrated by the Business Case model. In recent years, a number of Israeli companies have made efforts to hire a multi-ethnic workforce; these firms can be used as test cases for demonstrating that the model used abroad is also effective in Israel. The objective here is to convince the public and the media of the economic benefits and opportunities that are associated with a diversified workforce.

  • Placing particular emphasis on promoting the employment of Arab women, through:

    • Establishing women-friendly employment centers in Arab villages and enlarging the existing centers.

    • Founding business incubators for Arab women.

    • Finding solutions to the factors that currently prevent women from going out to work, e.g. by subsidizing day care and extended-day programs and creating a transportation service to major employment centers.

    • Establishing a negative income tax.

    • Making a special effort to find university-educated women jobs in their fields, through a system of incentives for employers.

    • Adapting and implementing the Encouragement of Incorporation and Advancement of Women at Work and of Adjustment of the Labor Environment to Women Law (2008), to help Arab women enter the private sector employment market.