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The Arab Sector: Israel's Springboard into the OECD?

Assaf Adiv is the National Director of the Workers Advice Center (WAC-MAAN). A briefer version of this article was published in The Marker on April 15, 2010.


very few months politicians and economists beat their breasts over the fact that Israel's 1.5 million Arabs have so little share in the economy. They are 20% of the population, but they contribute only 8% to the GDP.

Even when Arabs do take part, we find them only in menial occupations (construction, hotel services and agriculture). As for Arab women, only 18.6 % are in the labor force (compared to 55% of Jewish women). The low participation of the Arab sector has recently come up again—in the form of criticism by the Organisation for Economic Co-operation and Development (OECD), which Israel wants to join.

At the beginning of March, the indefatigable Shimon Peres, President of Israel, brought a busload of entrepreneurs to Nazareth, marking out the Arab sector as the next bastion for them to storm. This evoked memories of 1993, the Oslo year, when Peres announced the discovery of a pristine new continent for Israeli business called the West Bank. He then brought the moguls to regional economic conventions, which were suppose to use the agreement with the Palestinians to pave Israel's way to the Gulf states. This project was almost totally neutralized in the year 2000, when a second Intifada exposed the fact that Israel continues to hold on to the Palestinian territories and refuses to pay the price of peace.

Now Peres has re-discovered Nazareth. His visit was connected to a government plan from mid-March, dubbed as "historical" by its sponsor, economist and current Minister for Minorities, Avishai Braverman. In the next five years a little less than 800 million shekels (NIS)— 300 million from the existing government budget and 457 million from an additional budget—will be invested in 12 selected Arab localities: Nazareth, Sakhnin, Arabe, Shfar Am'r, Daliat al Carmel / Ussefia, Um al-Fahm, Kalanswa, Megharr, Tamra, Tira, Kfar Kasem and Rahat.

Of the total, 226 million will go to developing jobs, including investment in local infrastructure. 101 million will go to improvement of public transportation within and beyond the towns (giving Arabs access to jobs outside their community). 301 million will go to subsidies for loans to build housing on state and private lands. And 145 million will be invested in a program called City Without Violence, intended to upgrade police presence in the Arab sector. Another 5 million will go to supervising the plan. The figures are as announced by the government secretary from the cabinet meeting on March 21.

NIS 800 million is a pittance, however, compared to the NIS 4 billion that were promised to the Arab sector after the Intifada of October 2000—and never delivered. The Braverman plan's investment in infrastructure will amount to 628 million over a five-year period (after deducting the 145 million budgeted for the police)—in other words, about NIS 10 million per town per annum.

To put this amount in proportion: in education alone, the Arab sector will need more than one billion shekels annually, according to the "Economic Models" prepared for the Herzlia Economic Conference to be held this year in Nazareth. The present per-pupil expenditure in the Arab local councils is less than 45% of that in the Jewish. In order to overcome this gap, the annual Arab educational budget would need to be NIS 1.2 billion, or 3600 per person for about 325, 000 pupils (Ora Koren, The Marker Jan. 29, 2010).

The Braverman plan does not relate to the government's responsibility for across-the-board Arab unemployment, from the academics to the illiterate. Nor does it relate to the failure of a government plan from 2007 (Gov. Decision No. 2579) to upgrade the proportion of Arabs in state services to 10% by 2012. While making up 20% of Israel's population, Arabs are currently just 6% of those working in public services. A report by Sikkuy from 2006 illustrates this situation. Now, in 2010, we hear from Nader al-Kassem, a public official whose job is to oversee fair representation in governance, that there is no prospect of reaching the goal of 10% (Ynet, March 24).

Nor is there any good news in the Braverman plan for undereducated workers in construction and agriculture. The fact is that without the slightest budgetary increase, the government could, if it wanted, stop the importation of migrant workers in these two branches, thus opening tens of thousands of jobs for Arab workers while also increasing their bargaining power and improve the situation on the poverty rate [This goes without saying.]. Instead, it chooses to let middlemen make fat commissions in the "work-permit industry." For the last four years, spanning the Olmert and Netanyahu governments, Braverman's colleague in the Agriculture Ministry, Shalom Simhoun, has continued subsidizing the farmers by letting them exploit unorganized labor through the use of migrants, as well as local subcontractors.

The basic flaw in the Braverman plan, however, lies with two principles that the Israeli establishment has no intention of giving up: neoliberal economics, including privatization of the "inefficient public sector," and Jewish supremacy. The Israel of today lacks a political or social force that could carry out the revolution needed to integrate the Arabs. Where would such a force come from? From the tycoons, who in the last twenty years have made huge profits from destruction of the welfare state? From the leaders of the major political parties, who cozy up to the new billionaires? (See for instance the newest corruption scandal involving the monstrous Holyland buildings in Jerusalem). Neither group will bring relief to the hundreds of thousands of destitute workers and jobless academics in Nazareth and Rahat.

The practical implications of the Braverman plan for the Arab population may be small, but it is liable to serve as a fig leaf enabling Israel's entry into the OECD. The business community wants very much to enter this prestigious club. Membership would enhance foreign investment and encourage multinationals, as well as international banks, to collaborate with Israeli companies. The main impediment, as mentioned, is the OECD report, defining Israel's policies towards its Arab population as discriminatory. Indicators like labor-force participation, poverty rate, investment in infrastructure, education, culture, and public institutions all point to a radical problem, which Israel must deal with—says the report—if it wants to enter the club of advanced nations.

In publishing the new development plan, Braverman winks toward the OECD, but we can be sure that the moment Israel is in, no one will ask if it kept its promise. In that case, nothing will improve for its Arab citizens, and the same holds for the hundreds of thousands of Jews living on the country's perimeter. Besides, what if the promise were fulfilled this time? NIS 800 million would hardly make a dent.

Ten years ago the Caesarea Economic Conference was moved to Nazareth, symbolizing the putative desire to integrate the Arabs. WAC-MAAN staged a demonstration outside, claiming that the promise was empty, and that Israeli capital offers no potential for equal growth in the Arab sector. With hindsight we can say we have just endured another wasted decade, with more broken promises and deepening gaps. Meanwhile, frustration and extremism have grown in both the Arab and Jewish sectors. During this period, a new political party has developed, Avigdor Lieberman's Yisrael Beitenu (Israel Our Home), which, from its position in the government coalition, loudly opposes even this very modest plan to invest in the Arab sector.

In order to prevent further strengthening of right-wing, racist factors like Lieberman, there is a need for more than a token plan. Neither tycoons nor neoliberals will do what is required. Both the Jewish and Arab sectors must join forces in making the necessary change, one that will promise workers more than the empty table that gluttonous Israel leaves them."end"

Bank of Israel acknowledges: 60% of poor are low-paid workers

On April 6th the Bank of Israel published a press release showing that in the last few years there has been a growth in the number of people who are both employed and poor (see article). Among households with one breadwinner, 36% were beneath the poverty line (having less than half the average median income) in 2008/9. The members of these households make up more than 60% of the country's poor, about a million people out of Israel's 7.6 million. Among Arab households with one breadwinner (the norm for these), two-thirds fall below the poverty line. The situation has gotten considerably worse in the last decade. According to the authors of the report, this deterioration reflects the entry of many new, weaker workers into the labor force [a result of welfare cuts—A.A.] and lack of enforcement of labor laws to ensure them fair wages.

The Bank of Israel research refutes the message transmitted for the last decade that the only way to fight poverty is get people out to work. (The message was used, among other things, to justify the Wisconsin program (From Welfare to Work). The Bank pushed for drastic reductions in social benefits, so that people would be motivated to find jobs. Now, at last, it admits that the labor market is the source of the problem. Among all the western nations, the poverty rate in Israel is the highest, more than 20%, and so is the level of class polarization."end"

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