Working in Israel
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Find out how to get a job and work in Israel
Are you planning on working in Israel? As an expat, you’ll need further details on the national economy of this high-tech hub, as well as info on pensions, income tax, the job search, and working conditions. Check out the InterNations GO! Guide to Israel for all this and more!
Employment in Israel
From Kibbutz to High-Tech Nation: Israel’s Economic Development
When you start working in Israel today, it’s hard to believe that the national economy began with a strong focus on agriculture and socialist policies. Several decades ago, a job in Israel often meant farm work in a kibbutz, and most laborers were represented by a unified trade union organization.
The Histadrut (General Federation of Labor in Israel) had a huge influence on the nation’s economy and still plays an important role today, although it is no longer the dominant “state within the state” it used to be.
Nowadays, working in Israel means participating in a more liberal and diversified market economy characterized by a highly developed high-tech industry and a booming export sector. Israel recovered from the worldwide economic crisis of 2008/2009 and the Arab Spring of 2011 fairly quickly.
In 2016, Israel enjoyed an estimated 4% of annual economic growth and a GDP of more than 300 billion USD. Although the country has such economic issues as income inequality and high housing prices, it is definitely a competitive nation on the global market, and it is expected that its economy will continue to grow.
Traditional Industries in Israel
With regard to both the labor force and the gross domestic product, Israel’s primary sector has lost much of its importance. Israeli agriculture produces citrus fruit, vegetables, poultry, and dairy products, but it contributes a mere 2.1% to the GDP.
Israel’s industries, by comparison, contribute over a quarter of the gross domestic product to the national economy. The number of laborers working in Israel’s garment industry has decreased significantly: the production of textiles and footwear is often outsourced to developing countries and emerging economies with cheaper labor costs. However, other manufacturing industries, such as metalworking, the chemical industry, or diamond cutting, are still very much a part of the Israeli economy.
Israel: A Technology Hotspot
The best field for working in Israel is the high-tech industry. The country’s research universities provide an excellent education for graduates of the natural sciences or computer science who plan to enter one of Israel’s high-tech companies or research & development facilities. As a country lacking in natural resources, including most fossil fuels and even water, it’s hardly surprising that scientists working in Israel have made great progress in water conservation, desalination, and alternative energies.
There is also a prospering aerospace sector. Lots of employees working in Israel’s aerospace industry are actually involved in defense projects, but they have made important contributions to civilian aeronautics too, for example communication satellites. Last but not least, numerous researchers, engineers, and entrepreneurs working in Israel are employed in IT/CT, electronics, as well as the life and health sciences. Stem cell research, new software, or biomedical equipment, such as “Smart Hand” prostheses, are but a few examples of recent developments in these fields.
Finance and Tourism: Essential Industries in The Service Sector
The most significant employers in Israel’s tertiary sector (aside from the public sector) are the finance and tourism industries. Venture capital might be of particular interest: after all, countless new high-tech enterprises need funding. In the “Silicon Wadi”, start-ups spring up like mushrooms. On a per capita basis, Israel has one of the highest quotas of start-ups worldwide.
Although the number of visitors to Israel has decreased slightly in recent years (down from 3.5 million in 2012 to 3 million in 2016), perhaps due to the unstable political situation, tourism still provides jobs for around 6% of the country’s employees.
The country’s general employment situation is also good news for expats, with an unemployment rate of only 4.8% in 2016.
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Pensions and Taxation in Israel
Even if you are still young and have a long career ahead of you, it’s important to consider the impact of your time as an expat in Israel on your pension planning. However, if you are among the olim (Jewish immigrants making aliyah to Israel), you don’t need to worry too much, as Israel’s National Insurance provides coverage for all citizens, permanent residents, and Jewish migrants who were under the age of 60 when they arrived in the country.
National Insurance and Old-Age Pensions
During your working life as a salaried employee, your insurance contributions are simply deducted from your paycheck. If you are self-employed, you pay these national insurance fees out of your own pocket, as do the unemployed if they need to reach the qualifying period for receiving a state pension.
You usually need to have paid five years of insurance contributions during the last ten years before retirement or contributed for 12 years in total. If you fulfill these conditions, you then have to take an income test once you reach the retirement age.
If your income (e.g. from capital gains) is above a certain threshold, depending on such factors as your gender, employment status, and income sources, you may at first receive only a partial old-age pension from the Israeli state, or no pension at all. However, once you turn 70, you are automatically entitled to a basic state pension, which is fixed at 1,531 NIS per month.
Looking Ahead: Pension Planning for Expats in Israel
The average expat falls into the category of temporary foreign resident in Israel. As such, you are not eligible to receive any old-age pension from the state of Israel unless it’s stated otherwise in a social security agreement with your home country.
In any case, it is strongly recommended to get in touch with your social security office back home: they will help you to find out in which country you have to pay pension contributions and how exactly this will affect your right to a national pension.
In addition, don’t forget to contact your financial services provider, for example your bank. If you have a private pension plan, ask if you can simply keep paying your rates from abroad. You should consider this when calculating your expat budget and, if possible, during your salary negotiations. In case you don’t have a private pension plan yet, your upcoming stay in Israel might be a good opportunity for looking into one.
Paying Taxes — How Does It Work?
When it comes to taxes, you have to determine whether you count as a resident of Israel for fiscal purposes. As a general rule, apply the “183 days” definition: if you spend 183 days or more in Israel during one fiscal year (which in Israel is equivalent to the calendar year), you have fiscal residency. For more complicated situations, though, we’d recommend talking to the tax office or a tax accountant.
If you are a fiscal resident of Israel, you will have to pay taxes on your global income. Non-residents, however, are only taxed on their income generated in Israel. Your tax bracket depends on your overall taxable income and ranges from 10% to 50%.
Olim (i.e. recent Jewish immigrants) can claim a number of tax reductions that expatriates are not eligible for. Fortunately, there are also some tax benefits that expats not covered under a treaty can claim if they qualify for the status of a “foreign expert” or an “approved specialist”. Please contact the Israel Tax Authority for further information.
In Israel, you have to file your income tax return by 30 April. Before you go about doing your taxes both for the Israeli tax office and the revenue service back home, find out if your country of origin is among the over 50 states that have a double tax treaty with Israel. These agreements ensure that you aren’t taxed on the same income twice.
Job Hunting and Working Conditions
Most expat jobs in Israel are part of an intra-company transfer or a foreign assignment. If you are interested in searching for a new job on your own, be aware that many positions in Israeli companies are found by word-of-mouth rather than advertised on the open market.
This is due to Israel’s (and thus the business world’s) small size and the fairly informal, almost familial atmosphere that prevails in many companies. However, this may act as an obstacle for foreign applicants during their job search from abroad.
Finding Work: The Best Job Search Strategies
Many vacancies are advertised, on Internet job portals, such as israemploy, Jobsin Tel Aviv, or Nefesh B’Nefesh Israel Job Board. For selected fields like IT or biotechnology, there are more specialized websites, such as BioTechJobs.
A more efficient and proactive approach may be to research some Israeli companies in your field of employment and to contact them yourself. It’s essential to make a personal impression on the people who might be interested in hiring you, and talking directly to a HR representative is a great way to do this.
If you need an alternative way to start networking in the Israeli business world, then look for work as a freelancer for an Israeli company or find a new client base in the country. For IT jobs like software developer or graphic designer, for instance, this could be a feasible route. If you are coming to the country as a Jewish migrant, you could also look for a job placement via an aliyah organization.
The Dos and Don’ts of Business in Israel
The job application process in Israel is more informal than in other countries. Sending along a cover letter and an up-to-date CV may be enough, and diplomas, certificates, and references are often not necessary. An exception includes professions that require a license (e.g. in the medical sector), and if you can’t fulfil the legal requirements to carry out your occupation in Israel, it will be almost impossible to find a job in this sector.
Although English is commonly used in the Israeli business world, acquiring Hebrew language skills can definitely make you stand out as a new expat.
The Small Print: Minimum Salary and Maximum Working Hours
As a foreign employee in Israel, you are legally required to receive a written contract in a language you can understand, meaning that even if you don’t speak Hebrew, you can make sure of your working conditions beforehand. The current monthly minimum wage is 5,000 NIS, but this salary (about 1,212 EUR or 1,427 USD in October 2017) mostly applies to legal migrant laborers rather than highly-qualified expatriates.
Working hours in Israel are set at 43 hours a week, but often rise to 45, depending on your individual position and the sector you are working in.
All Work and No Play? Annual Leave and National Insurance
According to Israeli labor laws, you are entitled to a minimum of 12 days of annual leave, and this can rise to up to 28 days, depending on the number of years you have remained with your employer. You may also be entitled on additional leave on major religious holidays, according to your chosen faith. Of course, the amount of paid annual leave is something you could address during your contract negotiations.
While temporary foreign residents are not eligible for an Israeli state pension, their National Insurance coverage does include accident insurance, compensation for work injuries, up to 90 days of paid sick leave (one and a half days can be accumulated for every month of employment), and maternity allowance.
If you have worked for your employer for less than twelve months before the delivery, you are entitled to 15 weeks of paid maternity leave, with income-based benefits of up to 1,460 NIS per day. If, however, you have worked for your employer for at least a year, you can receive up to 26 weeks of maternity leave (only part of which will be paid).