In the Shadow of Iron Swords: Are Foreign Workers on Their Way to the Renovation Industry?
Sep 23, 2024
From: Raz Ohana, Manager of the Renovation Contractors Division.
A war of iron swords has struck the construction and renovation industry, dealing a real blow to renovation contractors. The renovation sector has been almost completely shut down since October 7th, mainly due to its reliance of more than 90% on Palestinian labor from Judea and Samaria.
This, while it is more necessary than ever
In the spirit of these words, we met for a brief conversation with Attorney Natalie Shimon-Weinstein, CEO of the Renovation Contractors Association, the industry's representative organization with approximately 2,000 members. We asked how renovation contractors are dealing with the situation, what achievements and solutions the association is managing to lead, and why she, as CEO, believes that every crisis is also an opportunity.
From: Raz Ohana, Manager of the Renovation Contractors Division.
A war of iron swords has struck the construction and renovation industry, dealing a real blow to renovation contractors. The renovation sector has been almost completely shut down since October 7th, mainly due to its reliance of more than 90% on Palestinian labor from Judea and Samaria.
This, while it is more necessary than ever . The damage caused to existing buildings as a result of the war in the south and north alone is estimated at approximately 2.5 billion shekels, and the question arises: who will rehabilitate and renovate them? In order to provide a humane and empathetic response to the public whose homes were damaged in the war, the Renovation Contractors Association established a Renovation Task Force for the benefit of the public at the beginning of this month (including a 24/7 telephone hotline for initial response). A joint venture of the association with government and public bodies.
In the spirit of these words, we met for a brief conversation with Attorney Natalie Shimon-Weinstein, CEO of the Renovation Contractors Association, the industry's representative organization with approximately 2,000 members. We asked how renovation contractors are dealing with the situation, what achievements and solutions the association is managing to lead, and why she, as CEO, believes that every crisis is also an opportunity.
Palestinian workers? Foreign workers?
"Until October 7th, the state gave a very broad mandate to renovation contractors to employ Palestinian workers, mainly from Judea and Samaria, but since Black Sabbath everything has changed," says Attorney Shimon-Weinstein. "Jewish workers have never been a factor for us, and foreign workers were not relevant because they specialize in wet trades and not in interior and finishing projects."
"One day, when the doors from Judea and Samaria simply closed on the entry of workers, the renovation contractors found themselves facing a broken trough. The ordering of new projects almost completely stopped due to the lack of manpower, and existing projects got stuck in the middle. Of course, the customers felt it too. Imagine living in an apartment in the middle of a renovation that is actually a small and dangerous construction site, or a situation where you bought an apartment, started renovating and now you are stuck between renting and a project that is delayed. In short, chaos like no other we have experienced."
"Until October 7th, the state gave a very broad mandate to renovation contractors to employ Palestinian workers, mainly from Judea and Samaria, but since Black Sabbath everything has changed," says Attorney Shimon-Weinstein. "Jewish workers have never been a factor for us, and foreign workers were not relevant because they specialize in wet trades and not in interior and finishing projects."
"One day, when the doors from Judea and Samaria simply closed on the entry of workers, the renovation contractors found themselves facing a broken trough. The ordering of new projects almost completely stopped due to the lack of manpower, and existing projects got stuck in the middle. Of course, the customers felt it too. Imagine living in an apartment in the middle of a renovation that is actually a small and dangerous construction site, or a situation where you bought an apartment, started renovating and now you are stuck between renting and a project that is delayed. In short, chaos like no other we have experienced."
Attorney Shimon-Weinstein says that the Renovation Contractors Association quickly got into the thick of it and acted through all the channels available to it. Starting from solutions based on the private sector and ending with continuous and close dialogue with the relevant authorities and government ministries.
"The association has been working for a year in an emergency format and around the clock," she says. "On the one hand, we are trying to create solutions with the key factors in the country, and on the other hand, we are operating communication channels for the renovation contractors who provide a response and assist on an individual level."
Renovation Contractors Association in an emergency and around the clock format
"The answer is yes, but," qualifies Attorney Shimon-Weinstein, "we need to understand that there are currently not many foreign workers in Israel who are suitable for renovations because most of them come to the country with the intention of construction and specializing in wet trades, such as skeleton or climbing. It is impossible to use the workers who are here and convert them to renovation work because these are simply different professional fields."
In addition, beyond the professional issue, Attorney Shimon-Weinstein lists several differences between workers in the construction industry and workers in the renovation industry. For example:
· Scope of work - The scope of employment of a foreign worker in the construction industry is about 233 hours of work per month, compared to only about 182 hours of work full-time in renovations. It is not really possible to work more than full-time in renovations. These are projects that are usually carried out in occupied or semi-occupied buildings, not on sterile construction sites.
· Employment costs - The employment costs of foreign workers are almost double the employment costs of Palestinian workers.
· Accommodation - Employing foreign workers requires accommodation solutions, unlike Palestinian workers who return home at the end of the day.
· Corporate brokerage – the employment of foreign workers is done through intermediary corporations, which constitute an additional entity whose services must be paid for.
"These examples are just a few that hold up the many," says Attorney Shimon-Weinstein. "Employing foreign workers in the renovation industry poses many more challenges, but there is apparently no choice. Not only is there a fundamental problem in bringing in Palestinian workers, but the public is also turning a cold shoulder."
Ahead of the Tishrei holidays, the Renovation Contractors Association published a survey that found that approximately 58% of Israeli clients are reluctant to bring in Palestinian workers for renovations and sometimes even limit this in the contract agreement.
Can foreign workers be used as a substitute?
"We don't stop making proposals to the relevant government ministries and authorities, but that's not always enough," says Attorney Shimon-Weinstein. "The state's attention is not entirely with us. However, there are also achievements. For example, we recently received an allocation of about 5,000 foreign workers with permits for the renovation industry who will be employed by corporations and help fill the ranks."
"The association is also working to reduce the economic burden on renovation contractors, and there are successes in obtaining discounts on fees for workers' permits. Similarly, there is advanced activity to develop mechanisms that will allow for direct recruitment of workers while reducing dependence on intermediary corporations. Including, for example, an attempt to establish a private bureau that will operate as a non-profit and mediate between the countries of origin and the renovation contractors. We are constantly challenging ourselves to think outside the box."
Association activities
The difficulties in the workforce sector, along with additional challenges in importing materials (for example, following the crisis with Turkey), are causing an increase in expenses. Attorney Shimon-Weinstein explains that while the price increases are clearly felt by customers, the renovation contractors are the last to "get rich" from it.
"A renovation project that normally costs 50,000 shekels can be priced at 80,000 shekels today, but the renovation contractor will earn the same amount at best," she notes. "There are even absurd situations where the workers earn more than the contractor who is chasing his tail with worries about cash flow, taxes, fees, employee-employer relations, recruiting, price quotes, and so on and so forth."
"Renovation costs are skyrocketing, but renovation contractors are earning the same"
Along with all the problems described above, renovation contractors are also forced to deal with the issue of insurance because it is a dangerous industry in which quite a few work accidents occur. Here are just a few examples of cases published in the Ministry of Labor report for 2023:
In March 2023, a worker was killed while renovating a private building in Pardes Hanna, in July 2023, a worker was seriously injured after falling from a rooftop in Kiryat Gat while renovating a private apartment, a month later, a worker was killed in a fall from a height while renovating a private home in Lod, and towards the end of the year, in November 2023, a renovation contractor was pronounced dead after falling while renovating an apartment in Haifa.
"The renovation industry is an industry that is fraught with risks and accordingly, work accidents occur, including, unfortunately, fatal work accidents," says Attorney Shimon-Weinstein. "The contractor's exposure is high and the relevant insurance policies do not always provide the answer."
The Renovation Contractors Association invests quite a bit of energy and resources in this issue, both in helping to locate policies for renovation contractors and in increasing awareness about risks, occupational safety, and insurance exposure.
"If we reconnect with the issue of Palestinian workers, we explain to all contractors that despite the great difficulty, hiring illegal workers should be completely avoided," says Attorney Shimon-Weinstein. "An accident involving an illegal worker on a renovation site means that he has no coverage for National Insurance benefits, and this is a component that is not covered by the policy. Such an accident can damage the reputation with the insurance company and become a snowball whose end is uncertain. Mainly because the worker's rights and the compensation he is entitled to easily climb to huge amounts, and in cases of death even to millions of shekels. All this before I even talked about the difficult implications in the event of an illegal work incident initiated by such a worker. The employer may be exposed to serious criminal sanctions and tort claims, without having insurance to protect him."
The Renovation Contractors Association works on this issue around the clock and collaborates with professional bodies. In particular, the association works in collaboration with the Itzick Simon Insurance Agency, which has specialized for more than 35 years in insurance in the construction industry, including insurance for renovation contractors.
Members of the association receive a personal and prompt response from agency representatives, including guidance and advice, both in purchasing insurance at attractive prices and, if necessary, in operating it.
"Customers are also beginning to understand that insurance is critical," says Attorney Shimon-Weinstein. "An accident in an apartment under renovation can also give rise to a tort claim against the owner of the apartment, who is defined by law as the 'client of the work.' In the absence of proper and appropriate insurance, the customer may find himself sued. Many customers ask renovation contractors to present them with valid insurance as an integral appendix to the contract agreement."
Dealing with insurance issues
In conclusion – a note of optimism
As we approach the new year, it is important for Attorney Shimon-Weinstein to end the conversation with an optimistic message. "We have had a difficult year, but we are Israelis and this is not the first time we have been forced to face the storm."
"Crises are sometimes also a kind of opportunity. I have no doubt that the renovation industry will recover and I believe that it will also emerge stronger and more stable. Just as we managed to overcome the Corona virus, we will overcome this too. We must always remember that beyond our current worries, there are fighters in Gaza and the northern sector who are aggravating their souls and hostages who are longing to return home, and our hearts are with them above all else."
As we approach the new year, it is important for Attorney Shimon-Weinstein to end the conversation with an optimistic message. "We have had a difficult year, but we are Israelis and this is not the first time we have been forced to face the storm."
Crises are sometimes also a kind of opportunity. I have no doubt that the renovation industry will recover and I believe that it will also emerge stronger and more stable. Just as we managed to overcome Corona, we will overcome this too. We must always remember that beyond our current worries, there are fighters in Gaza and the northern sector who are aggravating their souls and hostages who are longing to return home, and our hearts are with them above all else."
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