Employment of Foreign Experts in Various Projects in Israel
Employing foreign experts in numerous projects in Israel requires employers to meet stringent salary requirements, which significantly impact the overall costs of employment/project execution. As of January 2025, the average national salary stands at ₪13,153. Due to the requirement to pay foreign experts double the national average salary, the minimum required salary for a foreign expert employee is ₪26,306 per month. This marks a significant increase of approximately 6.3% compared to 2024, adding to the financial burden already faced by employers.
Beyond the salary itself, the actual cost of employing a foreign expert is considerably higher due to additional expenses, including pension and severance contributions, private health insurance, suitable housing, government fees, living expenses, flights, work visa costs, and more. These expenses create a significant barrier for many companies seeking to recruit foreign experts, despite the severe shortage of workers in critical sectors within the Israeli economy. For these companies, employing foreign experts is essential for their continued operations, as there is often a lack of Israeli personnel with the necessary skills and experience.
Therefore, regulatory flexibility and adjustments to current procedures are required to meet the needs of the economy, easing the integration of foreign experts and supporting Israel’s economic growth. Unfortunately, this is not the current situation.
Additional Costs Associated with Employing a Foreign Expert
Beyond the high base salary of ₪26,306 per month, employers face additional expenses that increase the total cost of employing a foreign expert to around ₪40,000 per month or more, depending on the role and employment conditions.
Key Costs Include:
- Suitable Housing: The employer must provide housing for the foreign expert throughout their employment and up to seven days after its conclusion. The maximum allowable deductions from the employee’s salary for housing vary by region but are negligible compared to actual housing costs, which range from ₪294.70 in the northern region to ₪540.39 in Tel Aviv per month. In practice, housing costs are significantly higher, especially in areas with expensive and dense real estate markets.
- Health Insurance: Employers are required to provide private health insurance for foreign employees as per the law. The maximum deductible from the employee’s salary for health insurance is ₪138.96, but in reality, employers often bear higher costs, depending on the extent of the health insurance policy.
- Pension and Severance Contributions: Employers must contribute to pension and severance funds according to Israeli law, with costs reaching up to 18.5% of the gross salary.
- Government Fees: Employing a foreign expert entails substantial government fees, including:
- A one-time application fee for a foreign expert work permit: ₪1,390.
- An annual work visa fee for a foreign expert: ₪11,460.
- Additional Expenses: These include round-trip airfare, daily commuting expenses, overtime payments, contract-based bonuses, and other related costs.
Challenges
The requirement to pay double the national average salary, along with additional associated costs, imposes a significant financial burden on companies looking to employ foreign experts in Israel. The aforementioned figure does not fully reflect the total employment costs, as it does not account for the employer’s overall expenditures, which include mandatory pension contributions, national insurance payments, private health insurance, housing costs, flights, government fees, and other expenses related to bringing in a foreign expert. This adds at least 30%-40% to the gross salary, sometimes even more, depending on employment conditions and regulatory requirements.
These figures are not adequately considered by the Population and Immigration Authority when setting procedures for issuing work permits for foreign experts or foreign workers in Israel. The requirement to pay double the national average salary, combined with additional demands under immigration procedures and labor laws, creates a substantial barrier for many companies seeking to hire foreign experts. This barrier particularly affects technology companies, advanced industries, infrastructure projects, and projects of national importance that require foreign experts due to the shortage of local personnel with the necessary qualifications.
For example, an Israeli company establishing an innovative logistics center to optimize its supply chain and improve global competitiveness may need to bring in foreign experts from an overseas manufacturer—experts with unique knowledge required for the construction of complex logistics warehouses and advanced technological systems.
However, the state’s stringent cost requirements, especially the double national average salary and related expenses, deter companies from making such investments in Israel. Furthermore, the current situation leads companies to relocate their operations to countries with more flexible regulations and lower labor costs, negatively impacting economic growth and Israel’s competitiveness in global markets.
Proposals for Improvement
Our firm regularly engages with relevant government ministries, including the Directors-General Committee in the Prime Minister’s Office and the Permits Unit at the Population and Immigration Authority, to ease the requirements for employing foreign experts and/or foreign workers in Israel and to reduce the heavy salary burden on employers. One key proposal is to reduce the current requirement of paying double the national average salary, setting the minimum at 150% of the national average salary—₪19,729—representing a 50% reduction from the current requirement. This adjustment is expected to significantly ease the burden on companies that need foreign experts, allow for greater employment flexibility, and reduce the gap between the needs of the economy and the strict regulations.
Additionally, attention must be given to the high fees associated with issuing work permits for foreign experts, which impose an extra financial load on employers. Moreover, the lack of specific procedures for various critical sectors in the Israeli economy hampers the recruitment of foreign experts, especially in the post-October 7 era, where there is an acute labor shortage. Key sectors such as energy, industry, infrastructure, railways, transportation, ports, engineering, biotechnology, medicine, defense industries, and retail all rely on foreign experts for essential roles. However, the high salary requirements and strict criteria do not align with the unique needs of each sector, creating significant barriers within the Israeli economy.
Therefore, regulatory adjustments are necessary to balance the critical needs of businesses and the severe labor shortages with the stringent—some would say excessive—requirements for recruiting and placing foreign experts in Israel.
Based on a thorough review of data and hundreds of conversations with both Israeli and foreign business owners, instead of maintaining a uniform approach where each government ministry operates independently when setting policies, there should be coordinated efforts to establish differentiated policies—a dedicated procedure for each sector—considering market conditions, company investment levels, and standard salary ranges in Israel and competing countries. Such adjustments would attract foreign investments to Israel, support large-scale projects within the country, strengthen Israeli manufacturing, and directly contribute to the national economy and the development of local industries.
