News Analysis: Israeli Jobs Head to Jordan; is This a Win-win Situation?

The peace process isn’t the only crisis that Israeli Prime Minister Benjamin Netanyahu is facing.

In December, the premier was booed during a trip to the development town of Ofakim, where unemployment has risen to nearly 15 percent. More recently, a one-day strike was held in several Druze villages to protest a loss of jobs in the textile industries, and the country’s labor and social affairs minister has predicted that unemployment will increase by a quarter in the upcoming months.

The president of one of Israel’s textile firms has a partial, albeit surprising, solution to the problem: Move Israeli plants to Jordan and Egypt.

When Israeli companies open plants in other Middle Eastern countries, said Dov Lautman of Delta Textile Industries, everyone wins: the Jordanian workers, the Israeli workers, the company — and the peace process.

“It’s a win-win-win situation,” Lautman believes, though not everyone agrees.

For Lautman and others, however, the story is simple.

Since Jordan and Israel signed a peace treaty three years ago, Jordanians have encouraged Israeli entrepreneurs to invest in Jordan. Lured by low wages — the average monthly salary in Israel is approximately $1,400; in Jordan it approximates $300 and in Egypt it’s around $100 — some Israeli companies have complied.

Some 15 Israeli textile factories now operate plants in Jordan, manufacturing goods that are mostly destined for exports to the United States. The products are designed and tailored in Israel, transferred to some 30 sewing plants in Jordan and then returned to Israel for packing and shipment.

Delta operates — jointly with Jordanian partners — a large textile plant in the Jordanian city of Irbid.

“Only thanks to us employing 700 workers in Jordan, can we employ 3,000 workers in Israel at a decent salary,” Lautman said in a recent interview. “Had it not been for them, we would have had to close down our Israeli plants.”

Indeed, the use of Jordanian labor is allowing Israeli firms, some say, to compete with goods made in the Far East.

Textile companies that don’t want to open plants abroad will suffer, said Lautman. As an example, he mentioned Gibor Sabrina, which recently closed down its sewing plant and laid off 1,000 workers.

“Had Sabrina employed 200 workers in Jordan, it could have kept 800 of its Israeli workers,” he said.

Economic experts such as Severe Plotzker, the economic editor of the Israeli daily Yediot Achronot, suggested that Jordan’s close location to Israel makes it a valuable partner.

“Had it not been for the peace with Jordan, Delta Textile would have opened sewing workshops in Bulgaria and Romania,” Plotzker wrote recently. If this were the case, he suggested, the plants would have been transferred to Eastern Europe, and the Israeli plants would have been forced to closed down altogether.

If Delta’s Lautman touts the joint efforts, Aharon Efroni, an Israeli businessman, is accepting them reluctantly.

Efroni is working on a computer project in Jordan in which the Jordanians would buy parts from Italy, assemble them and then ship them to Israel for final assembly.

He doesn’t buy Lautman’s assertions.

“Of course, this hurts the Israeli worker,” said Efroni.

“Unfortunately, this trend will continue,” predicted Efroni. “There is no other way. People are businessmen who want to make money before they are patriots. The Israeli economy will have to adjust to the new reality. It simply has no other choice.”

Textiles is the main Israeli industry that has opened in Jordan — it relies on a cheap manual labor pool widely available in the Hashemite kingdom — but other industries have followed suit.

Other Israeli businesses now operating in Jordan include food plants, metal factories whose products are exported to the United States, battery plants, a tin-box factory, plastics, agricultural projects — and one small computer software plant.

Some 2,500 Jordanians have joined the labor force as a result of the Israeli plants there.

And this appears to be only the beginning.

The Israeli Embassy in Amman is aware of more than 20 other plans for new Israeli plants in Jordan at some level of cooperation with the Jordanians. These include spheres like plastics, electronics, communication and even diamond polishing.

Some 50 Israeli plants are also slated to open in the northern Gaza Strip.

Israeli economic involvement continues, despite the political setbacks.

“One can notice a slowdown in new initiatives,” said Gil Feiler of the Info- Prod Research Center in the Tel Aviv suburb of Ramat Gan, “but there are new initiatives, and whatever was started continues.”

Israelis also invest in the West Bank — and Egypt. Companies like Delta and Tefron are among those that own plants in Egypt.

But whereas in Jordan business is based on copartnership with Jordanians, in Egypt those companies are the sole owners of the plants.

In both countries, some of the clothes manufactured are exported to European countries without any mention of the Israeli origin of the company — so that the products will count against the quotas that Europe has for these countries, and not for Israel.

Not everyone appears to be seeing the benefits.

Mohammed Ramal, who owns a sewing plant in an Israeli Druze village – – unemployment now exceeds 15 percent in some of these villages — says the government should shoulder some of the responsibility, which he says “does not understand that its first duty is to provide its own citizens with decent employment opportunities.”