Israel & Labour Relations
The union that built a country — and then had to reinvent itself
Israel’s Histadrut — the General Federation of Labor — is one of the most extraordinary union organizations in history. Founded in 1920, before the State of Israel existed, it was not just a union but an economic empire: it owned banks, construction companies, factories, a health service, and a newspaper. It was, in many ways, the state before the state. The story of Israeli labour relations is largely the story of the Histadrut’s rise, its role in nation-building, and its difficult transformation into something resembling a conventional trade union confederation.
10 Things That Stand Out About Labour Relations in Israel
- The Histadrut (General Federation of Labour in Israel) was founded in 1920 in British Mandatory Palestine by Jewish socialist settlers. It was simultaneously a trade union, an employer, a provider of social services, and a political institution — functions that reflected the unique circumstances of building a national home in the absence of a state.
- At its peak in the 1970s, Histadrut-owned enterprises accounted for approximately 25% of Israeli GDP, employed hundreds of thousands of workers, and included Kupat Holim (the general health fund serving 75% of the population), Bank Hapoalim (Israel’s largest bank), and the Koor industrial conglomerate. No union organization in the democratic world has ever combined labour representation and economic enterprise on this scale.
- One of the most important figures in Israeli labour history is David Ben-Gurion, who served as Secretary-General of the Histadrut before becoming Israel’s first Prime Minister. Ben-Gurion’s dual role illustrated the inseparability of the labour movement and state-building in early Israeli political history — the Histadrut was, in significant ways, the institutional backbone of the pre-state Jewish community.
- The economic crisis of the 1980s and the stabilization programme of 1985 marked the beginning of the Histadrut’s transformation. The programme required wage restraint and economic liberalization, and the Histadrut — as simultaneously a union and a major employer — found itself in impossible conflicts of interest that eventually forced the separation of its economic and union functions.
- The 1994 reform of the Histadrut, led by Haim Ramon, was a watershed moment. Kupat Holim (the health fund) was transferred to state management, the economic enterprises were progressively divested, and the Histadrut was transformed — painfully and incompletely — into something more resembling a conventional trade union confederation. Membership was opened to Arab-Israeli workers on equal terms for the first time.
- Union density in Israel has declined from approximately 85% in the 1970s to around 25–30% today, reflecting the Histadrut’s transformation, the growth of the private technology sector, and changes in the labour market. The New Histadrut remains the dominant union body but operates in a fundamentally different environment.
- Israel’s high-technology sector — home to globally significant companies in cybersecurity, defense technology, and digital services — is largely non-unionized and operates with employment practices influenced by American tech culture. The gap between labor standards in the tech sector and in lower-paid service industries is one of the most significant dimensions of Israeli labour market inequality.
- Palestinian workers in Israel — both Arab-Israeli citizens and workers from the West Bank and Gaza — have had a complex and often disadvantaged relationship to the Israeli labour relations system. Arab-Israeli workers are covered by Israeli labour law but face documented labour market discrimination. Palestinian workers from the occupied territories work under arrangements that largely exclude them from Israeli collective bargaining protections.
- Israel has a national minimum wage, set by the government after Histadrut consultation, that has been raised significantly in recent years. Alongside collective agreements in major sectors, the minimum wage is one of the primary mechanisms for establishing wage floors in an increasingly fragmented bargaining environment.
- Israeli labour relations today are shaped by the tension between the strong protections of the formal sector — covered by collective agreements and Histadrut representation — and the growing informal and precarious employment in contracting, food delivery, cleaning, and care work. Organizing these workers into the collective bargaining system is the central challenge facing the New Histadrut.
