7 February 2010
By
Jonathan Cook
Over the past four decades
Israel has defrauded Palestinians working inside
Israel of more than $2 billion by deducting from their
salaries contributions for welfare benefits to which
they were never entitled, Israeli economists have
revealed.
A new report, “State
Robbery”, to be published later this month, says the
“theft” continued even after the Palestinian Authority
was established in 1994 and part of the money was
supposed to be transferred to a special fund on behalf
of the workers.
According to information
supplied by Israeli officials, most of the deductions
from the workers’ pay were invested in infrastructure
projects in the
Palestinian territories
-- a presumed reference to the massive state subsidies
accorded to the settlements.
Nearly 50,000 Palestinians
from the West Bank are working in Israel -- following
the easing of restrictions on entering Israel under
the “economic peace” promised by
Benjamin Netanyahu,
the
Israeli prime minister
-- and continue to have such contributions docked from
their pay.
Complicit in the deception,
the report adds, is the Histadrut, the Israeli labour
federation, which levies a monthly fee on Palestinian
workers, even though they are not entitled to
membership and are not represented in labour
disputes.
“This is a clear-cut case
of theft from Palestinian workers on a grand scale,”
said Shir Hever, a Jerusalem-based economist and one
of the authors of the report. “There are no reasons
for Israel to delay in returning this money either to
the workers or to their beneficiaries.”
The deductions started
being made in 1970, three years after the Israeli
occupation of the Palestinian territories began, when
Palestinian workers started to enter Israel in
significant numbers, most of them employed as
manual labourers
in the agriculture and construction industries.
Typically, the workers lose
a fifth of their salary in deductions that are
supposed to cover old age payments, unemployment
allowance,
disability insurance,
child benefits,
trade union fees,
pension fund,
holiday and sick pay, and health insurance. In
practice, however, the workers are entitled only to
disability payments in case of
work accidents
and are insured against loss of work if their employer
goes bankrupt.
According to the report,
compiled by two human rights groups, the Alternative
Information Centre and Kav La’Oved, only a fraction of
the total contributions -- less than eight per cent --
was used to award benefits to Palestinian workers. The
rest was secretly transferred to the
finance ministry.
The Israeli organisations
assess that the workers were defrauded of at least
$2.25bn in today’s prices, in what they describe as a
minimum and “very conservative” estimate of the
misappropriation of the funds. Such a sum represents
about 10 per cent of the PA’s annual budget.
The authors also note that
they excluded from their calculations two substantial
groups of Palestinian workers -- those employed in the
Jewish settlements and those working in Israel’s black
economy -- because figures were too hard to obtain.
Mr Hever said the question
of whether the bulk of the deductions -- those for
national insurance -- had been illegally taken from
the workers was settled by the Israeli High Court back
in 1991. The judges accepted a petition from the
flower growers’ union that the government should
return about $1.5 million in contributions from
Palestinian workers in the industry.
“The
legal precedent
was set then and could be used to reclaim the rest of
these excessive deductions,” he said.
At the height of
Palestinian participation in the Israeli labour force,
in the early 1990s, as many as one in three
Palestinian workers was dependent on an Israeli
employer.
Israel continued requiring
contributions from Palestinian workers after the
creation of the Palestinian Authority in 1994, arguing
that it needed to make the deductions to ensure
Israeli workers remained competitive.
However, the report notes
that such practices were supposed to have been curbed
by the Oslo process. Israel agreed to levy an
“equalisation tax” -- equivalent to the
excessive contributions
paid by Palestinians -- a third of which would be
invested in a fund that would later be available to
the workers.
In fact, however, the
Israeli State Comptroller,
a government watchdog official, reported in 2003 that
only about a tenth of the money levied on the workers
had actually been placed in the fund.
The finance ministry has
admitted that most of the money taken from the workers
was passed to Israeli military authorities in the
Palestinian territories to pay for “infrastructure
programmes”. Hannah Zohar, the director of Kav La’Oved
who co-authored the report, said she believed that the
ministry was actually referring to the construction of
illegal settlements.
The report is also highly
critical of the Histadrut, Israel’s
trade union federation,
which it accuses of grabbing “a piece of the pie” by
forcing Palestinian workers to pay a monthly
“organising fee” to the union since 1970, even though
Palestinians are not entitled to membership.
Despite the Histadrut’s
agreement with its Palestinian counterpart in 2008 to
repay the fees, only 20 per cent was returned, leaving
$30m unaccounted for.
The Histadrut was also
implicated in another “rip-off”, said Mr Hever. It
agreed in 1990 to the Israeli construction industry’s
demand that Palestinian workers pay an extra two per
cent tax to promote the training of recent Jewish
immigrants, most of them from the former Soviet
Union.
Mr Hever said that in
effect the Palestinian labourers were required to
“subsidise the training of workers meant to replace
them”. The funds were never used for the stated
purpose but were mainly issued as grants to the
families of Israeli workers.
In one especially cynical
use of the funds, the report notes, the money was
spent on portable stoves for soldiers involved in
Israel’s three-week attack on Gaza last year.
In response, the finance
ministry called the report “incorrect and misleading”,
and the Histadrut claimed it was “full of lies”.
However, neither provided rebuttals of the report’s
allegations or its calculations.
Mr Hever said the
government body responsible for making the deductions,
the department of payments, had initially refused to
divulge any of its figures, but had partly relented
after some statistics were made available through
leaks from its staff.
Assef Saeed, a senior
official in the Palestinian Authority’s labour
ministry, said the PA was keen to discuss the issue of
the deductions, but that talks were difficult because
of the lack of contacts between the two sides.
Jonathan Cook is a
writer and journalist based in Nazareth, Israel. His
latest books are “Israel and the Clash of
Civilisations: Iraq,
Iran and the
Plan to Remake the
Middle East”
(Pluto
Press) and
“Disappearing Palestine: Israel's Experiments in Human
Despair” (Zed Books). His website is
www.jkcook.net.
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