Construction Industry Warns: Expulsion of Veteran Foreign Workers Could Raise Housing Prices and Delay Projects

The Association of Foreign Construction Corporations has issued an urgent appeal to Prime Minister Benjamin Netanyahu, who also serves as Minister of the Interior, warning that a decision not to extend work permits for veteran foreign workers could cause severe damage to Israel’s construction sector and broader economy.

According to the association, the Population and Immigration Authority has ruled that foreign construction workers who have been in Israel for more than 63 months will not receive permit extensions and must leave the country by January 31, 2026. The directive applies to approximately 4,000 veteran workers, including workers from Ukraine, despite the ongoing war there.

Estimated Impact: Higher Prices, Delayed Deliveries

In his letter to the Prime Minister, Eldad Nitzan, Chairman of the Association, warned that the move would lead to an estimated 3% increase in apartment prices, an average delay of eight months in the delivery of residential units, and economic damage exceeding NIS 400 million to the construction industry.

“The Population Authority’s decision not to extend the permits of veteran foreign workers will cause major harm to the construction sector,” Nitzan wrote. “These workers are highly skilled and essential to maintaining construction timelines and quality.”

Labor Shortage Deepens Amid Recruitment Constraints

The construction industry is already facing an acute labor shortage, currently estimated at approximately 40,000 workers, even before the expected departure of the veteran workforce. Industry officials warn that recruiting new foreign workers is a lengthy process, particularly through bilateral agreements, and may be further delayed due to regional instability, including the ongoing war in Israel and rising tensions on the Iranian front.

As a result, the industry is expected to suffer an immediate shortfall of at least 4,000 skilled workers, which officials say will significantly disrupt construction activity nationwide.

Quota Limits  Complicate Replacement Efforts

Compounding the problem, the government has not yet approved an increase in the quota allowing foreign workers to exceed 3.3% of Israel’s population, effectively preventing the entry of new workers as replacements.

In addition, industry representatives note that newly recruited foreign workers often lack sufficient training and experience. Veteran workers play a crucial role in training, supervising and supporting new arrivals — a function that would be lost if the permits are not extended.

Industry Calls for Policy Reconsideration

Nitzan urged the government to reconsider the decision, emphasizing the broader economic and social implications.

“Preventing the continued employment of skilled veteran workers will cause unnecessary damage to the Israeli economy and society,” he wrote. “On the contrary, allowing them to remain will contribute to growth, stability and improved performance in the construction sector.”

The association is calling on the Prime Minister to intervene immediately to prevent what it describes as a serious policy failure with far-reaching consequences for housing supply and affordability.