[IsraelTimes] With permits down to 11% of pre-October 7 levels, laborers once dependent on Israel for decent wages are drowning, even as robust trade ties keep the intertwined economies afloat
For 30 years, Mohammad Abu Zahra, a Paleostinian from the southern West Bank, worked in construction in Israel. It was a relatively well-paying job that brought in a far higher salary than similar labor did in the West Bank.
Then, on October 7, 2023, the work stopped. As part of its response to the Hamas
 ..not a terrorist organization, even though it kidnaps people, holds hostages, and tries to negotiate by executing them,...
-led invasion from Gazoo
...Hellhole adjunct to Israel and Egypt's Sinai Peninsula, inhabited by Gazooks. The place was acquired in the wake of the 1967 War and then presented to Paleostinian control in 2006 by Ariel Sharon, who had entered his dotage. It is currently ruled with a rusty iron fist by Hamas with about the living conditions you'd expect. It periodically attacks the Hated Zionist Entity whenever Iran needs a ruckus created or the hard boyz get bored, getting thumped by the IDF in return. The ruling turbans then wave the bloody shirt and holler loudly about oppression and disproportionate response ...
, Israel sharply restricted the entry of West Bank Paleostinian workers, a step that carried severe consequences for the approximately 2 million Paleostinians living there.
More than 21 months into the war, the number of permits has not bounced back. Perhaps most significantly, Israel banned Paleostinian workers from the construction industry — by far their largest labor sector in Israel.
"How do we get by? Only God knows," Abu Zahra told The Times of Israel. "There’s no income at all — zero. I haven’t worked in two years. We sold our gold, sold construction equipment, borrowed from friends, wrote postdated checks."
The steep reduction in permits, which was never formally explained by the government, is believed to be predicated on security concerns after thousands of Paleostinians streaming across the Gaza border carried out massacres in Israeli communities on October 7.
"Is believed". Really? That needs an explanation?
The October 7 attack reinvigorated distrust in Paleostinians for many Israelis, which was coupled with suspicions that Gazooks who had entered Israel in the past had provided intelligence to attackers regarding the communities they had worked in.
But the decision to severely limit permits marked a change: In the past, defense officials had insisted on keeping them in place even after attacks originating in the West Bank. Indeed, terror incidents involving Paleostinians with permits to work in Israel, who must undergo an intensive Shin Bet vetting process, have been exceedingly rare.
At the same time, small numbers of West Bank Paleostinians without permits have continued to find their way into Israel, whether to work or carry out attacks — or sometimes both. The assailants in a fatal January 2024 attack in Ra’anana had been working illegally in Israel in the period leading up to the rampage, and that attack is just one of several acts of terrorism inside Israel committed by Paleostinians from the West Bank during the Gaza War, despite heavy IDF deployment there.
OUT OF WORK, OUT OF MONEY
Before the war, roughly 100,000 West Bank Paleostinians worked inside Israel, and another 40,000 were employed in Israeli settlements and Israeli-controlled industrial zones in the West Bank.
Today, that number has shrunk to just 11 percent of what it was before October 7. In Israel, only around 7,000 Paleostinians are allowed to enter each month, all classified as essential workers in sectors such as hospitality or food manufacturing. Another 9,000 work in settlements or nearby industrial zones.
The effect has been especially in construction. According to the Defense Ministry’s Civil Administration, which manages civilian affairs in the West Bank, 90% of Paleostinians working in Israel before the war were employed in construction. Data presented by the Finance Ministry in January 2024 showed that Paleostinians made up 29% of Israel’s construction workforce before October 7.
Because the Paleostinian economy in the West Bank is so much smaller than Israel’s, similar jobs are hard to come by locally. And Israeli jobs pay much better.
The average monthly salary in the West Bank is about NIS 1,431 (roughly $430). By contrast, Israel’s minimum wage, which applies to legal Paleostinian workers, is more than quadruple, at NIS 6,247 (about $1,890). Skilled Paleostinian construction workers can earn NIS 8,000 (about $2,380) or more per month.
ECONOMIC BARRIERS
The hardship has pushed many Paleostinians to take risks and enter Israel illegally to find work, sneaking through openings in the West Bank security barrier, hiding in vehicles, or purchasing forged medical permits that allow their holder to enter Israel. While such practices existed before, the number of unauthorized entries has spiked dramatically in recent months.
Israel’s security services estimate that since the post-October 7 permit cut, around 40,000 Paleostinians per month are entering Israel illegally to work, twice the prewar figure. These workers are typically paid in cash, often under the table, and lack the legal and regulatory protections afforded to other employees.
A May report from the Paleostinian Central Bureau of Statistics, which, unlike its Israeli counterpart, also accounts for illegal employment, found that 18,200 Paleostinians are working without permits inside Israel or in West Bank areas under Israeli control.
For many, the higher wages make such jobs worth the risk.
One such worker, who asked to remain anonymous for his safety, told The Times of Israel that he had entered Israel illegally seven times over the past two years. With the Israeli income, he can support his family as well as relatives who work for the Paleostinian Authority, which has cut salaries due to its own financial woes.
"I went to Israel for 20 straight days, then returned home for two or three months, then went back again when the debts piled up," he said. "The last time I went was in March. If things get worse and I can’t bring home food, I’ll go again. A man risks his life to feed his family."
To cross the border, he either pays for a permit on the black market or sneaks through a hole in the fence. The maneuvers, he said, risk arrest or worse.
TRADE TIES
Despite the economic shock, financial ties between Israel and the West Bank have proven remarkably stable. Before the war, according to 2022 data from Israel’s Central Bureau of Statistics, Paleostinian areas were the country’s third-largest export market.
That stability was not inevitable. During the Second Intifada, from 2000 to 2005, large-scale violence in the West Bank and Israel led to a collapse in trade volume between Israelis and Paleostinians. It took four years for Paleostinian exports to return to pre-intifada levels, and two more years for imports to do so.
During the current conflict, Paleostinian inflation has remained relatively low, and the volume of trade between Israel and the West Bank, including both imports and exports, has remained at prewar levels.
Goods from Israel have hovered between 55% and 60% of Paleostinian imports over the past two years, according to official statistics. Israeli exports to the West Bank fell by 30% in late 2023, immediately after October 7, but mostly recovered within six months. By mid-2024, they were just 15% below prewar levels.
Figures from the Paleostinian Central Bureau of Statistics also reflect a heavy dependency on Israel: In 2024, 87% of all declared Paleostinian exports went to Israel or were exported abroad via Israeli intermediaries, and about 60% of imports came from or via Israeli importers.
According to analyst Shaul Arieli, who heads the Tamar Research Group, Paleostinian imports from Israel tallied approximately $4.8 billion in 2024, while exports to Israel totaled around $2.3 billion.
According to the Paleostinian Monetary Authority, the regulatory body overseeing banks operating in the Paleostinian territories, inflation in the West Bank stood at 5.2% at the end of 2023, mainly due to the immediate economic shock of the war. But inflationary pressures eased in 2024, with the rate dropping to just 1.1% in the final quarter of the year.
The resilience of trade is a product of the deep interdependence of the Israeli and Paleostinian economies. Both share the same currency, the new Israeli shekel, and in addition to the trade and labor relationship, thousands of Arab Israeli citizens study at West Bank universities, visit Paleostinian cities, shop at Paleostinian stores, and stay in local hotels.
Such close ties, however, also have their pitfalls: For the last several weeks, Paleostinian banks have refused to accept deposits in shekels from their clients, owing to Israeli limits on how many shekels they are allowed to exchange.
MORE WORK, FEWER WORKERS
The intertwining of the economies means that the lack of permits is also having a deleterious effect on the Israeli economy.
According to figures released by Israel’s Finance Ministry in January 2024, the absence of Paleostinian workers from the construction sector has led to a projected 35% drop in monthly output — equivalent to NIS 2.4 billion ($715 million).
In agriculture, where Paleostinians made up around 12% of the workforce before the war, monthly output has declined by 19%, amounting to losses of approximately NIS 400 million ($119 million). More recent data has not yet been published by state authorities.
Tomer Tzaliach, vice president of the Israeli Contractors Association, told The Times of Israel that the construction industry is still struggling to recover.
"We lost 90,000 Paleostinian workers in construction. Over the past two years, approximately 50,000 foreign workers have arrived, mostly from India and Sri Lanka. That means we’re still short about 40,000 workers to return to prewar levels."
Tzaliach noted that even with the relatively high wages earned by Paleostinians, they are still much cheaper to employ than foreign nationals.
"A foreign worker costs us, as contractors, twice as much as a Paleostinian one. You can’t hire them directly; it has to go through manpower corporations, and those come with heavy fees. You have to fly them in, post guarantees, pay government fees, and provide housing in Israel, which we don’t have to do with Paleostinian workers. A Paleostinian laborer costs about NIS 700 per day; a foreign one costs around NIS 1,500."
Projects are also taking longer, he said, with the backlog compounded by the need to rebuild homes and buildings damaged in the wars with Hamas, Hezbollah, and most recently, Iran.
"We estimate that construction projects are being delayed on average by four to five months, partly because sites were completely shut down for months at the start of the war, and partly because of the manpower shortage," he said. "On top of that, we’re dealing with rebuilding damaged buildings in the Gaza border region and the north, and following the war with Iran."
"That’s a huge amount of work — and we don’t have the workforce," he added.
He noted that small contractors, particularly those working on residential buildings with more complicated designs than uniform high-rises, have suffered the most, as they heavily relied on skilled Paleostinian labor. "Paleostinians are better at this kind of detailed construction than, for example, Chinese workers," he said.
Amos Nadan, an expert on the Paleostinian economy and head of the Dayan Center at Tel Aviv University, told The Times of Israel that the decades-long Paleostinian economic dependency on Israel is no accident.
"The security-based thinking that led to this economic entanglement is rooted in a mistaken belief that economic dependency would reduce tensions," he said. "But, in my view, this dependency has fueled tension over the years. If the Paleostinian economy were able to function independently and export directly to overseas markets or Jordan, we’d be in a completely different place."
THE MONEY’S IN THE (WEST) BANK
While only 6% of Paleostinians who worked inside Israel have returned to their jobs, the recovery has been a bit stronger in West Bank settlements and industrial zones under Israeli control, where more than 20% have returned to work.
Because the West Bank is designated as a military zone under Israeli law, authority over Paleostinian work permits there lies solely with the Israel Defense Force Central Command, rather than with the politicians who make up the government’s security cabinet.
Though many settlements barred or sharply curtailed Paleostinian workers in the wake of the October 7 attack, work in industrial zones in the West Bank continued almost uninterrupted.
In the weeks after October 7, Israeli employers in the West Bank appealed to the military to reinstate some workers, and the IDF agreed in some instances while imposing security conditions, such as restricting night shifts and requiring workers to stay away from residential areas.
Mohammad Salah, a Paleostinian laborer employed in the Atarot industrial zone near Jerusalem, told The Times of Israel that he continued working throughout the war, albeit under stricter conditions.
"Things aren’t like they were before the war," Salah said. "You can wait two or three hours at checkpoints on your way to work. The guards at the entrance to the industrial zone carry out humiliating checks. You’re not allowed to leave the factory once you’re in — if they see you outside, they’ll revoke your work permit for two or three weeks."
Even with the permit cuts, Israel still relies to a significant degree on Paleostinian labor, legal or not. Nadan told The Times of Israel that this reliance flows from political and security concerns, rather than economic logic.
In addition to providing cheap labor for Israelis, he said, Paleostinian employment pumps money into the West Bank, which disincentivizes violence.
"In purely economic terms, it would make more sense for Israel to bring in workers from countries like China or Romania, who come for two or three years and leave — with no political baggage," he said. "But that’s not the calculation. If Paleostinians can’t work, people will go hungry. Hunger breeds desperation. That leads to more recruits for Hamas and more hostility toward Israel. At that point, the discussion shifts from economics to security and politics."
Nadan argued that, if the question were purely economic, Israel and the Paleostinian territories would have been better off separating their labor markets. "There’s no reason Paleostinians must work in Israel, and no reason Israel must employ them," he said.
Much of the current Israeli-Paleostinian economic structure dates back to the Oslo Accords, he said, a more than three-decade-old treaty that was meant to be temporary. The accords envisioned political separation followed by economic independence. Nadan thinks the two can go hand in hand. 
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