The Link Between Labor Shortages and Israel’s Strategic Security

The government of Israel must recognize the strategic importance of agriculture, the food sector, and other industries producing goods that are vital for the country’s security and for the continued functioning of the business sector during times of emergency and war

Israeli volunteers help out with pomegranade harvest at kibbutz Kfar Menahem, southern Israel in October 2023. Photo by: Yossi Zamir/Flash90

Due to the war, various sectors of the Israeli labor market are suffering from a severe shortage of workers. At the same time, there are other sectors whose economic activities have been shut down or curtailed, with many workers sent on unpaid leave or working reduced hours as a result. The labor shortage stems from a challenging combination of factors: hundreds of thousands of workers have been called up for IDF reserve duty; parents of young children have been forced to remain at home with their children due to the closure of many parts of the education system; thousands of Thai workers employed in agriculture have left the country; construction sites have been shut down due to fears of admitting Palestinian workers in the Jewish communities; and many workers from Arab society have stayed away from their workplaces due to an atmosphere of mutual fear and suspicion during this sensitive period.

Thus, while industry, agriculture, construction, food retail, the health system, and other sectors are facing a lack of workers, other sectors—such as tourism and leisure—have become irrelevant, whether due to the restrictions on public gatherings or due to the general public mood at the current time.

With all the public criticism that has been voiced over the lack of action taken by government ministries since the start of the war, it is worth noting the rapid response of the Ministries of the Economy and Labor, the Israel Employment Service, and the National Emergency Management Authority (NEMA), which within a short period of time set up a platform to match job supply with demand. The Israeli government should publicize this welcome initiative more widely among employers and the general public, so that this synchronization between labor supply and demand can be carried out quicker and more effectively.

There is also a supply of good people, who may not otherwise be working, who are willing to step in and ensure that economic activity continues during the war, including pensioners, volunteers from abroad, Haredim, university students whose studies have been postponed, and more.

But how is all this connected to the strategic security of the State of Israel in wartime? The answer is that if there is no one to harvest agricultural produce from the fields, there will be a shortage of fruit and vegetables. If there are not enough workers in the food production industry and in food retail, then we will face more empty supermarket shelves. If there is no one to work on construction sites, then construction schedules will lengthen, and housing prices will rise even further. And if there are not enough factories to produce critical combat equipment (such as helmets or ceramic vests), which tend to be imported, then the lack of equipment for soldiers will not be addressed quickly enough.

Those who believe—particularly in government ministries—that increasing imports is the main solution to the expected shortages in strategic goods and fresh food, as well as to the high cost of living, even if it means harming the profitability of local production, should consider what might happen if we have to close our seaports. Unfortunately, this is far from an unlikely scenario. During the first week of the war, ships were diverted from the port in Ashdod to Haifa because of the threat of rockets from Gaza. What will happen if the northern front with Hezbollah becomes more active and the port in Haifa is also forced to close? What will be the consequences for our food security and national resilience when imports into Israel are halted?

The government of Israel must recognize the strategic importance of agriculture, the food sector, and other industries producing goods that are vital for the country’s security and for the continued functioning of the business sector during times of emergency and war. For more than a decade, the OECD has been calling on Israel to adopt direct support measures for farmers, by means of grants encouraging the implementation of technological innovation. The same policy—of awarding grants for investment in innovation—should also be applied to the construction industry. An opportunity lies in the fact that construction sites and agricultural lands are currently shut down, in both the south and the north, to offer grants to stimulate investments in technological innovation in these sectors. This will serve to strengthen them for future crises by reducing their dependence on foreign workers, will help increase productivity, and may even encourage the employment of Israeli workers in those branches and at a decent wage.