The status of the Palestinian labor market in Israel has been seen
as a function of changing levels of regional tension, depending
particularly on Israel's security/punitive policy of border closure
and work permits. But this is not the whole picture. The decline of
the Palestinian labor market in Israel is not exclusively related
to peaks of violence, although no doubt affected by them. If one
takes into account the fact that the Israeli economy between 1967
and 1987 owed much of its prosperity to Palestinian labor, the
decline of the latter's role in Israel probably warrants a more
complex explanation than just violence.
Indeed, a closer look indicates that various economic interests
curbed Palestinian employment in Israel as early as 1992-1993. The
most significant development has been the growing import of cheap
labor power from Asia, Africa, Eastern Europe, and South America.
The devastating effect of the current Intifada on Palestinian labor
inside Israel is better described as a final blow to a patient that
was already terminally ill. The current context of globalization
involves massive relocation of production to low-expense regions,
mass transfer of cheap labor power, the concomitant high rates of
local unemployment amongst blue-collar workers, and the extended
asymmetrical relations of power between stronger and weaker
economies. The case of the Israeli and Palestinian economies is one
more case among many, in which a strong first world economy borders
on a weak reposition of cheap labor power. The decline of the
Palestinian labor market and the grave problems facing the
Palestinian economy at large are thus also indicative of a global
process.
An Irreversible Blow?
While since 1967 Palestinian labor power has contributed to Israeli
prosperity, its status has often been extremely unstable due to a
host of local and regional factors. Until the first Intifada of
1987, Palestinian laborers had been employed by Israel (including
in the occupied territories) and by Arab oil-producing countries.
This Intifada, eventually fading during the 1991 Gulf War, had
raised a serious question as to the future of this important
sector. Foreign laborers (mainly Asian and Egyptian) had occupied
many jobs in the Arab countries. In Israel, foreign workers were
East Asians, Africans, South Americans, and East Europeans. For the
regional markets the new laborers have had three major advantages
over Palestinian labor power: they have been cheaper, stable (less
prone to political turmoil) and temporary.
After the establishment of the PNA (Palestinian National Authority)
in 1993, many Palestinian laborers could work both in Israel and
the PNA. However, the second Intifada (2000) has again inflicted a
blow upon this market. Considering the present Israeli economic
trends, this blow may now be irreversible. The economic functioning
of the PNA has not been a success story. Between the first Intifada
(1987-1991) and the second (2000) Intifada Palestinian consumption
has decreased significantly and since September 2000 the violent
events have caused additional damage and the future does not look
rosy. It can now be assumed that a settlement that includes some
kind of political "independence," has become less realistic than it
looked just a few years ago. Nonetheless, even if this eventually
occurs, Palestinian economic "independence" seems more and more
problematic.
Many factors suggest that the Palestinian economy may have to fight
against poverty and instability in unfavorable circumstances.
First, there are the effects of years of continuous Israeli
occupation including economic domination over the Palestinian
consumption and labor markets. The current crisis of the peace
process has further exasperated the situation, with rise in
violence and the Israeli policy of closure, as well as massive
destruction of Palestinian infrastructure. As a result, there is an
increasing gap between the developed "globalizing" Israeli economy
and the somewhat pre-industrial Palestinian economy.
In aspects like export and import, it is likely that the
Palestinian economy will continue to depend on the Israeli economy,
involving actual and potential risks to the Palestinian economy.
However, these risks are minor compared to those inherent in
Palestinian dependence on the Israeli labor market. This market had
contributed half of the Palestinian GNP prior to October
2000.
Options for the Palestinian Labor Market
In fact, the fragility of this sociologically and economically
important resource has become clear as the Israeli policy of
closure carried out since October 2000 has practically done away
with Palestinian labor in Israel. True, this is not the first time
that Palestinian laborers have been denied employment in Israel.
But the present political and economic circumstances, and
especially Israeli interests, may indicate that the Palestinian
economy, or rather what is left of it, will not be able to depend
upon the Israeli labor market any longer.
On the Palestinian side, there are voices that argue (or hope) that
Israel and the Palestinian state (if and when it is established)
will eventually maintain close economic contacts, including the
resumption of employment of Palestinian labor in Israel. Others,
however, consider alternative employment options for the
Palestinian laborers who used to work in Israel prior to the recent
Intifada, including their re-exportation to Arab countries,
especially the oil-producing ones. At any rate, it is evident that
at the time of writing (early 2002) employment opportunities for a
significant number of Palestinian laborers both in the PNA and in
Israel are poor. Current international and regional conditions and
power relations do not indicate that the Palestinian party can
reverse this trend.
What is the Israeli interest? Some scholars and publicists claim
that stability in the region will largely depend on Palestinian
economic independence. But there are no signs at all that Israel
would be willing to provide the necessary conditions for a
settlement in that spirit. Moreover, in the Israeli press the term
'unilateral separation', which had been prominently bandied about
since the first months of the al-Aqsa Intifada, was used as a
euphemism. Behind the slogan was concealed a policy of economic
severance, political pressure and collective punishment,
heralding-the continuation of control over the Palestinians.
Israeli 'economic independence' in this context means, among other
things, the denial of employment for Palestinians in Israel. Taking
into account the interests that are currently evolving within
Israeli economy and policies, this is more likely to be a long-term
strategy than a transitory tactic.
On the one hand, the agricultural and construction sectors
(supported by some ministries within the Israeli government) are in
urgent need of unskilled labor, since Palestinians were shut out as
a result of the closure. However, the current situation seems to
have ultimately confirmed the absolute advantage of cheaper
imported (foreign) laborers over a Palestinian labor force prone to
political instabilities. Needless to say, manpower firms, which
have mushroomed in Israel in the last decade, also share this
interest.
Inclination to Globalization
On the other hand, some particularly influential sectors within the
Israeli government and the private sector, all expressing in the
last decade increasing inclinations toward globalization and
international markets, would probably wish to diminish those
sectors producing solely for the internal market, especially
agriculture. They have indeed been trying to minimize the number of
illegally imported laborers. Apparently, this trend does not
distinguish between nationalities or countries of origin: it refers
both to Palestinian as well as to other foreign laborers. For quite
another reason, this orientation also corresponds with the
intentions of various strong real-estate lobbies, mainly
contractors and landowners. These have a vested interest in
minimizing local agriculture in favor of commercial shopping malls,
toll highways, and other profitable concrete-laden projects. At the
present moment the state and these lobbies, which exert strong
political influence, seem to be much more powerful than the
potentially "redundant" agricultural sectors.
Israeli interest in the Palestinian import market, however, does
not seem to diminish, as "unilateral economic separation plans"
refer almost exclusively to labor power. It seems inevitable,
though, that a profound and prolonged crisis in Palestine, with
persistent unemployment and poverty, will also affect Israeli
exports to the PNA. Israel may have to deal with this difficulty by
allowing a part of the Palestinian labor force back into Israel or
simply by siphoning off international aid money given to the
Palestinians.
In another facet of the globalization process, as local
agricultural production becomes less profitable, pressures to turn
fertile land into real estate are increasing. Ironic as it may
seem, the fate of the Palestinian agricultural labor market in
Israel appears, at least to some extent, to be bound up with the
fate of Israeli agriculture which once used to be a cornerstone of
the Zionist project.
If the present violence continues, the Palestinian economy can
anticipate a severe and long-standing crisis. Under such
circumstances, it seems likely that the only option for employment
will have to be based on the re-exportation of Palestinian labor
power to the Arab oil producing countries. Whether this option is
realistic or not will be determined by regional and global factors
the discussion of which is generally beyond the scope of this
article. Nonetheless, the Arab oil-producing countries actually
face problems with imported labor power, indicating that even this
solution may not be feasible.
On November 21, 2000, i.e. when serious signs of economic
depression in the Palestinian territories had already become
alarming, representatives of the PNA went to Cairo to ask the Arab
Ministers of Labor to increase their quota for Palestinian
laborers. The ministers pointed out that a reduction in oil
production is constantly decreasing the need for foreign labor, a
trend that could rise if Iraq is allowed to resume its oil
production. In fact, Palestinian workers already find themselves at
a disadvantage in competing with Egyptian, Jordanian, and Yemenite
workers in a constantly shrinking market.
In conclusion, it remains uncertain whether, in the short run, the
Palestinian labor market and the Palestinian economy will be able
to make progress. But in the long run, it should be understood that
a complete collapse of the Palestinian economy could undermine the
stability, the interests and security in the region and in the
international context.