Economic Citizenship. Amalia Sa’ar
for Jewish workers. This organization was established in the early 1920s as a pillar of the Zionist labor movement and held uninterrupted political hegemony until the late 1970s. With the direct help of the state, it became a key actor in almost every sector of the economy, owning some of the largest industrial business groups in the country, the largest construction company, the largest commercial bank, the largest insurance company, and the largest retail chain, and developing a large institutional network. It thus acted, at one and the same time, as the biggest workers’ union and the second major employer in the country, second only to the state itself (Maman and Rosenhek 2012; Grinberg 1993).
For the new state, close collaboration with the Histadrut was one of several tools utilized to fulfill its commitment to full employment for the Jewish population, together with massive investment in key economic sectors, notably industry, construction, infrastructure, and agriculture, and close supervision of import and export to protect local manufacturing. Particular attention was paid to the development of labor-intensive industries, notably textiles, metals, chemicals, construction, and agriculture (Levi-Faur 1998, 2001). Such occupations were deemed appropriate for the less-educated Jewish immigrants from Arab countries, the Mizrahim, and they seemed to achieve several goals at once: the immigrants would supply the necessary manpower for the rapid industrial development of the country (Levi-Faur 1995; Lavie 2006); in turn, steady employment of these immigrants, accompanied by subsidized housing, welfare, and standardized state education, would be the requisite channel to modernize them and thus enhance the future cohesion of Israeli society (Swirski 1989). Lastly, the geographic disposition of the new factories, agricultural communities, and construction jobs was strategically planned so that the demographic distribution of the Jewish population would prevent the return of the Palestinians, as well as severing territorial contiguity between the Palestinian communities that remained. The new towns built along Israel’s southern and northern borders were called development towns. New immigrants, or those already residing in transit camps, were given jobs and housing to encourage them to settle there, and were penalized by losing these and other benefits if they refused (Kemp 2002). Thus Mizrahi Jews were assigned early on to the doubly subordinate position of being working class and residing in the social-geographic periphery (Tzfadia and Yiftachel 2004; Chetrit 2004).
Newcomer Ashkenazi Jews too were sent to transit camps and development towns. Many of them were Holocaust survivors who reached the new state destitute and traumatized. Yet many among them managed eventually to get better jobs than the Mizrahim, and ultimately also to get closer to the center—of the country and of the political establishment. According to Bernstein and Swirski (1982), the better paid and better connected sectors in the newly developing workforce consisted mostly of Ashkenazim, both veterans and new immigrants. These formed the governmental entrepreneurial-managerial apparatus, a sizeable stratum of industrialists, bankers, and other entrepreneurs who received the investment capital obtained by the government, and an even thicker stratum of engineers, technicians, and skilled workers. Mizrahim, by contrast, found themselves mainly in the large stratum of semiskilled or unskilled laborers. This class positioning, as mentioned, often went hand in hand with their geographic marginalization. It was also accompanied by their routine framing as “culturally backward” (e.g., Dominguez 1989), with far-reaching implications throughout the state apparatus, notably in the healthcare system, or in the schools system, where second-generation Mizrahi children were systematically tracked to vocational occupations (Swirski 1999; Yonah and Saporta 2002b; Chetrit 2004). Still, their inclusion in the Zionist project meant that by and large they were embraced by the Histadrut, which made them eligible for health insurance, subsidized housing, welfare benefits, and other entitlements.
The outermost of these concentric circles of belonging, namely, the secondary workforce, consisted of the weakest: Mizrahim and Palestinians. Although the Palestinians who remained within the 1948 borders were granted nominal citizenship from the start, for the first decade and a half of Israeli statehood they were ruled by military government, which effectively segregated them in homogeneous communities and strictly limited their entry into the Jewish areas. The imposition of military government directly and adversely affected their capacity to generate livelihood, either through agriculture or paid work. With most of their lands confiscated following the 1948 war, and their being effectively prevented from cultivating the plots they still kept, the Palestinians who remained in Israel underwent rapid transformation from fellahi or small-scale agriculturalists to day-laborers (Rosenfeld 1978). Since their previous cultural and commercial connections were brought to an abrupt halt and no new economic venues were made viable within their communities, their only recourse was to work in the Jewish economy. This channel, in turn, was regulated closely by the military government, which rationed the provision of transit permits to protect the employment of unskilled Jewish immigrants (Rosenhek 2003). Thus in times of high unemployment during the 1950s, restrictions on the movement of Israeli Palestinians were tightened, whereas in the early 1960s, when full employment was attained and there was still a demand for cheap and unskilled labor in construction and agriculture, they were admitted in growing numbers. However, they were excluded from the Histadrut (Rosenhek 2003), which effectively kept them outside organized labor. So until 1967 the Palestinian citizens comprised a reserve army of commuter laborers, employed as temporary and casual workers in jobs with low wages, poor work conditions, frequent violations of workers’ rights, and high occupational insecurity (Rosenhek 2003; Semyonov and Lewin Epstein 1987).
An important turning point occurred in 1967 following the Six-Day War and the Israeli occupation of the West Bank and Gaza Strip. Having gone through a short-term recession in the mid-1960s, in the years immediately after the war the Israeli economy enjoyed a renewed boom, buttressed by the entry of a large reservoir of unprotected and cheap workers from the newly occupied territories and by a substantial growth in military industries. Concomitantly, the dual composition of the labor force was deepening. Like Israeli Palestinians, noncitizen Palestinians commuted daily to their places of employment, returning at night or at weekends to their families and communities. But unlike Palestinian Israelis, who by now enjoyed greater freedom of movement and some basic, if limited, state services, the noncitizens had no political or social rights. For the next twenty years, until the outbreak of the first intifada in 1987, large-scale employment of noncitizen Palestinians remained largely unregulated despite some attempts to change this; their routine border crossings arguably served the political interest of the state to naturalize the territorial continuity of Israel with the occupied territories (Rosenhek 1999). More directly, they served the demand of Israeli employers, including the Histadrut in its capacity as a major employer, for cheap, unprotected labor. Noncitizen Palestinian commuters replaced the dwindling supply of Israeli menial workers and helped keep in check the wages of workers in the primary sector. Under conditions of full employment in the aftermath of the 1967 war (Rosenhek 1999) younger generations of Mizrahi Jews were now aiming for less precarious and more rewarding employment. Israeli Palestinians too were boosted by the entry of their noncitizen brethren and, with the annulment of the military rule and later also their gradual admission to the Histradrut, they started to enjoy better job selection and better employment conditions.
Less than a decade later, in the aftermath of the following war in October 1973, the economy started to slow down. Local production was not meeting the state’s rising military expenditure, and global economic restructuring also started to exert its effect. Four years after the war the Labor party lost power, for the first time in the state’s history. Stagnation deepened during the late 1970s and early 1980s, inflation was rising rapidly and threatened political stability; meanwhile the big banks and conglomerates were actually getting richer (Shalev 1999).
Finally, in 1985 a national unity government signed an emergency economic stabilization program. That year marks the starting point of a far-reaching process of economic liberalization and deregulation, which continues ever more vigorously today. It includes a transition of the major business groups from the ownership of the state and the Histadrut to private capital, downsizing factories and outsourcing production to poorer countries, and selling mega-concerns to private hands, thus generating massive pressure to liquidate organized labor in them. Instead of the labor-intensive industries, which were the hallmark of the Israeli economy in the early decades, the state has taken to investing in high-tech industries, often in close association with the military industries, and to making it a priority to attract private foreign investments.
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