Labor welfare in Israel

This article links transformations in the strength and influence of the Histadrut, the trade union federation in Israel, to changes in occupational welfare in that country. Fringe benefits and other forms of occupational welfare have traditionally played a major role in both the incomes of employees and the labor costs of employers in the Israeli labor market, and are integral and crucial elements in the welfare state. However, the extent of these benefits and the proportion of employees with access to them changed dramatically over the last three decades. During the golden age of the trade union movement (which began prior to the establishment of the State of Israel in 1948 and continued until the mid-1970s) an elaborate and comprehensive occupational welfare system was established. It provided extensive fringe benefits, access to health insurance, labor rights for employees in the primary sectors of the economy, and was based upon corporatist style agreements between the government, the trade union federation and private sector employers. Yet rapid liberalization of the Israeli economy and political upheavals, that ended Labor movement dominance in politics, led to the disintegration of the centralized corporatist labor relations system, a decline in the levels of unionization, and the weakening of the Histadrut. The result of this was extremely limited access to occupational welfare on the part of non-unionized workers, particularly those with temporary jobs in the private sector, and for migrant workers. By contrast, the occupational welfare system for organized workers in the government sector has remained largely intact despite the Histadrut's weakness, while employees in the significant hi-tech sector enjoy a wide range of employer initiated fringe benefits.