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Distrupted workforce

Israel-Hamas conflict disrupts workforce and business operations

The consequences of this ongoing war have had a widespread impact on the region's workforce ecosystem

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Israel has called up approximately 360,000 reservists – nearly 8% of the country’s workforce
Workforce solutions firms are not exempt from the disruptions caused by the conflict

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As the Israel-Hamas conflict continues to develop, staffing and workforce solutions firms are preparing for potentially extended disruptions in the job market.

The consequences of this ongoing war have had a widespread impact on the region’s workforce ecosystem. Israel has reportedly revoked work permits for around 4,500 Palestinian workers, leaving many unaccounted for or displaced due to the conflict, as reported by The Independent.

Israel has also called up approximately 360,000 reservists, representing nearly 8% of the country’s workforce, according to data from Moody’s Analytics. This workforce reduction is expected to create significant disruptions for businesses within Israel. Furthermore, this disruption may extend beyond Israel’s borders, as even those working abroad have been called back to participate in reserve duty.

One sector that is likely to be significantly affected by the reservist call-up is the high-tech industry, which contributes to approximately one-fifth of Israel’s gross domestic product. High-tech has been the fastest-growing sector in Israel for several decades and is vital to the country’s economic growth, providing jobs for approximately 14% of the workforce.

Before the conflict, the labour market in the Palestinian territories was already facing challenges. Many Palestinians worked temporarily in Israel, particularly in the construction sector, where they constituted over 65% of the workforce.

Impact on workforce solutions firms

Workforce solutions firms are not exempt from the disruptions caused by the conflict. Raz Chorev, the CEO of the employer-of-record firm CWS Israel, highlighted that when workers are called up for reserve duty, it results in reduced productivity, leading to delays in project deliveries and completions, with subsequent economic implications. CWS Israel is actively communicating with its employees and clients to maintain business operations during this challenging period. They are also educating their clients on how to navigate employment matters during times of conflict, such as the possible absence of staff due to reserve duty.

One sector that is likely to be significantly affected by the reservist call-up is the high-tech industry, which contributes to approximately one-fifth of Israel’s gross domestic product

Raz Chorev emphasised, “Even though we are an employer of record in Israel, we have a co-employment arrangement. So we’ve got joint responsibility for the welfare of our employees.”

Employer of record Papaya Global, also based in Israel, has seen around 50 to 60 of its 300 Israel-based employees called to military service. CEO Eynat Guez noted that their global structure enables them to continue running “business as usual” while their Israeli staff focuses on supporting one another and their country.

Meanwhile, global companies have had to make adjustments due to the conflict. Some have temporarily closed their operations in Israel, with employees working from home, while others have temporarily shut down their businesses in the country.

The response of the workforce ecosystem

Amidst these challenging circumstances, workforce solutions firms are prioritising the safety of their staff. ManpowerGroup, one of the world’s largest staffing firms, has been operating in Israel for over six decades. Chairman and CEO Jonas Prising expressed his support for their Israeli colleagues and acknowledged their dedication to helping those affected while ensuring the continuity of day-to-day operations.

A spokesperson for Israel-based talent platform Fiverr stated that their immediate focus during the ongoing conflict is on the safety and support of their employees, their families, and the broader Fiverr community. They emphasised that their business operations have continued without major interruptions or material impacts, as a significant portion of their business is conducted outside of Israel.

Talent platform Upwork has been focused on ensuring the safety of its team members in the region. While CEO Hayden Brown has encouraged the team to support humanitarian aid efforts, the company has refrained from making public statements about the situation.

The Israel-Hamas conflict has undoubtedly created a complex and challenging environment for the workforce and businesses in the region, requiring innovative solutions to maintain operations and ensure the safety and well-being of employees.

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