Racism in all its shapes and forms, whether based on religion, nationality, gender or ethnicity has the same purpose – economic discrimination. This is because, upon analyzing the different kinds of racism we find that it is easier to rob, deprive and financially discriminate against a group of people by “marking” them. Economic discrimination starts at the governing body. Sometimes it is grounded in law and sometimes it is hidden from view. The better we understand this the easier it will be for us to address the different kinds of racism. The following examines the examples of the pension fund and sick fund, to illustrate how economic discrimination manifests itself.

The first concerns the P.A. Arab Workers’ Pension Fund, implemented in  October 1970, to regulate P.A. Arab employees’ work in Israel. In order for this to be achieved a Civil Administration Payroll Department was set up for receiving the contributions and making the payments. The decision provided P.A. Arab workers with the same rights as Israeli workers employed in the same industries, subject to the collective agreements in force, with taxation set at the same rates.

In theory this move presented a step forward for P.A Arab workers. However, the way this decision presented itself in reality is somewhat different. Since 1970, more than a million P.A. Arabs have been employed in Israel and were registered with the Payroll Department. However, the Department only pays a monthly pension to a few hundred of them, as the majority of the workers withdraw the accrued funds during periods of unemployment due to closures, dismissal or other reasons.

Moreover, compared to Israeli workers, who receive regular statements from the funds regarding the balance of their pensions, P.A. Arab workers do not receive any reports and are not informed of the sums accruing in their funds. This therefore prevents them from being informed enough of their current pension accrual to determine whether to withdraw their money or to leave it in the fund. The Payroll Department makes payments to those wishing to make withdrawals without providing an account showing how the totals were reached. Compared to Israeli workers contributing to pension funds who are only able to withdraw their severance pay after having been dismissed, thus leaving the remainder in the fund to ensure their pensions, P.A. Arab workers are forced to withdraw the entire sum accrued. This thus leads to a situation where there are only a few hundred P.A. Arab workers currently being paid a monthly pension.

Another issue concerns the fact that in cases of death or disability, all pension funds are supposed to provide an allowance for the spouse and dependent minors until they reach 18 years of age, even if the death or injury occurred before retirement age is reached. However, in the case of the pension fund managed by the Payroll Department, which is supposed to ensure equal rights with regard to pension funds, the picture is different. This is because no explanations are provided regarding the manner in which payment to dependents is arranged. When P.A. Arab workers die, the Payroll Department is quick to inform their widows that they are entitled to a lump sum of the accrued funds. However, they fail to inform them of their right to receive a monthly payment for the rest of their lives nor of their right to receive monthly payments for their minor dependents until they reach eighteen years of age. The total amount due from monthly payments far exceeds the accumulated sum.

Over the past three years, we have followed cases of two widows dealing with the Payroll Department in their attempts to receive monthly pensions. However, we have run into a brick wall as we have received no response to our demand to obtain a monthly pension and have been forced to apply to the Labour Court. Time passed and the widows, finding themselves with no income, decided they couldn’t afford to wait any longer and finally accepted the offer of a lump sum.

In view of this experience, we applied to the Payroll Department for the regulations or procedures applicable to the pension fund for which it is responsible. When our application was ignored, we applied to the Population Authority’s Freedom of Information Director – who is currently responsible for the Payroll Department (it was previously overseen by the Ministry of Finance), to obtain the regulations governing the Payroll Department’s pension fund. Oddly, the Section replied on 21 August 2014 that it is postponing the provision of the regulations by one month since their publication requires ‘meetings and coordination with various elements’. The postponement notice is indeed odd – the Payroll Department collects contributions from both employers and employees and has been managing the various funds for decades. A month passed but the regulations were neither published nor delivered to us.


Another example of economic discrimination is evidenced by the Sick Fund. At one time collective agreements determined that employers pay 2.5 percent to sick funds managed by the pension funds. When workers took sick leave and could present a doctor’s letter, the pension fund would pay them their salaries in lieu of their employers. The employers’ monthly contributions to the fund ensured that the workers received benefits exceeding those stipulated by the sick pay laws. The clause requiring the payment of sick fund contributions was removed from the collective agreements some time ago and employers stopped paying into the fund. The Payroll Department, which was to have created regulations equal to the rest of the economy’s collective agreements failed to adapt itself to the changes and continues to charge all employers who employ P.A. Arab workers the 2.5 percent of their gross wages for the sick fund insurance scheme.

However, it appears that only a few workers actually benefit from this insurance scheme. Moreover, a perusal of maternity grant fund regulations in similar funds (old pension funds) shows that the maternity grant fund is supposed to pay workers both work injury supplements and birth grants. The Payroll Department does not pay injury supplements to workers who have suffered work-related injuries at all. Injury benefits are set at 70 percent of the worker’s salary. The supplement is 30 percent.

Payments to workers are processed through P.A. employment bureaux. Workers who have been taken ill present their doctors’ certificates to the employment bureau staff who pass it on to a P.A. medical board. After the board examines and certifies the number of days off sick as specified by the worker’s physician, the document is sent to an Israeli doctor for examination. After the procedure is completed the worker is paid the money a minimum of five months later. P.A. employment bureau staff claim that in some cases the worker receives his payment six months later. The law stipulates that sick pay is subject to the same regulations as salaries.

Data received from the Population Authority’s Freedom of Information Director regarding sick pay shows that over the past four years, relatively few workers have benefited from sick pay. In 2013, out of 41 thousand P.A. Arabs working for Israeli employers who receive their wages through the Payroll Department, only 421 sick workers received sick pay. This was the distribution in previous years:

YearSick Pay RecipientsTotal Paid to Workers NIS

To demonstrate how much money failed to reach its target – according to our calculations, in 2013 the Payroll Department collected NIS 46,740,000 from employers in contributions on behalf of 41,000 workers. After deducting the NIS 1,213,737 paid out to workers, the Payroll Department retained the sum of NIS 45,526,263 (the calculation is based upon a gross average monthly wage of NIS 3,800 – many P.A. Arab employees do not work full months. Where has the surplus money gone? The Payroll Department claims that monies remaining in the fund are paid to the Ministry of Finance. This is also the case for monies accruing in the pension fund and not paid out to the workers.