Israeli Committee Approves New Regulations Reducing Housing Costs for Construction Employers of Foreign Workers

Israel's Knesset Labor and Welfare Committee has approved new regulations allowing construction employers to deduct a significantly larger share of housing costs from the wages of foreign construction workers, marking what industry representatives describe as a breakthrough.

The revised regulations increase by approximately 50% the amount that can be deducted from workers' salaries to cover housing expenses, easing a long-standing financial burden on manpower corporations and construction companies.

Construction Industry Welcomes Regulatory Change

For years, licensed foreign manpower corporations and construction firms have absorbed most of the rising costs associated with providing accommodation for foreign workers in Israel.

Industry representatives also note that these housing expenses have generally not been recognized by the Israeli tax authorities for income tax or VAT purposes, further increasing employers' operating costs.

Employers to Recover Larger Share of Housing Costs

According to Eldad Nitzan, Chairman of the Foreign Manpower Corporations Association in the Construction Industry, foreign workers had previously contributed only NIS 300 per month toward their housing costs.

"Under the new regulations, most of the workers' rental costs will be deducted from their salaries," Nitzan said. "This represents a significant reduction in the financial burden borne by contractors and construction companies regarding employee housing expenses."

The average monthly salary of a foreign construction worker in Israel is approximately NIS 7,500.

The construction sector has faced steadily rising accommodation costs in recent years, alongside higher utility expenses, including electricity, water, gas, and municipal taxes.

According to industry officials, these increases have largely been absorbed by manpower corporations and construction companies responsible for providing housing to foreign employees.

Industry Seeks to Expand Foreign Workforce

Approximately 75,000 foreign workers are currently employed in Israel's construction sector.

At the same time, about 220 licensed foreign manpower corporations are working to recruit an additional 40,000 foreign construction workers to help address labor shortages across the industry.

Industry Thanks Lawmakers for Supporting the Reform

Nitzan welcomed the committee's decision and thanked Labor and Welfare Committee Chair MK Michal Miriam Waldiger, former Labor Minister MK Yoav Ben Tzur, and Dubi Amitai, Chairman of the Coordination Bureau of Economic Organizations, for supporting the regulatory reform.

He said the new rules provide meaningful relief to contractors by reducing the cost of employee housing and related expenses, including utilities and municipal taxes, at a time when the construction industry continues to face significant labor and operating cost challenges.