Contractors Warn: War & Turkish boycott impact on construction

After more than six months of deepening crisis in Israel's construction and infrastructure sector, Raul Srugo, President of the Bonei Haaretz (Builders of the Land) Contractors Association, representing contractors and entrepreneurs across the industry, penned a scathing letter to the prime minister and finance minister, accusing the government of driving the industry to the brink of collapse.

"This industry is at its worst state ever, among other things due to government decisions that only deepened the crisis," Srugo contends. According to association data, decisions led by the government to halt the entry of Palestinian workers since October 7 and attempts to replace them with foreign workers who have not arrived are expected to cause a 6-8 month delay in projects nationwide.

In the letter, Srugo warns Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich that without an immediate plan to bring in 50,000 foreign workers, permit the return of some Palestinian workers, compensate affected contractors and facilitate imports, the consequences will include contractor collapse, apartment price hikes, Israeli worker layoffs, hindered reconstruction efforts, and substantial revenue loss to state coffers from tax under-collection and reduced land sales.

The letter coincides with the government's impending announcement of tax increases. Noting the industry's contribution of NIS 90 billion to state revenues in 2022, Srugo urges the finance minister, "There is no need to raise taxes! The increase in the state deficit is not only due to the increase in war expenditures, but also due to the loss of tens of billions of shekels in revenue from the construction industry.

"The money is placed on the table and we need to make the right decisions that will result in simply collecting it at the checkout, at the same time as speeding up the industry and reducing the pressures for housing price increases."

Srugo concludes with a stark warning to the Netanyahu and Smotrich: "Now you will not be able to say 'we didn't know', 'they didn't tell us.'

"If the Israeli government does not take care immediately to lead moves aimed at encouraging construction and encouraging the industry to invest in housing for long-term rental and to increase the number of construction starts, the prices of apartments and rents will jump by dozens of percent, in a short period of time," he warned, "so that only the rich will be able to purchase or rent apartments."