National Labor Court Approves Pensions Agreement that Discriminates against Arab Workers

The current agreement requires employers to pay pension insurance to female workers aged 20 and above and male workers aged 21 and above, excluding younger workers, a large percentage of whom are Arab

On 3 January 2012, the National Labor Court issued a decision approving a Mandatory Pensions Agreement signed by the Histadrut labor union and the Office for Coordination of Economic Institutions in late 2007 that discriminates against Arab workers. The agreement obliges employers to pay pension insurance, disability insurance and insurance to cover loss of the ability to work only to female workers aged 20 and above and male workers aged 21 and above. It therefore disregards Palestinian Arab citizens of Israel who enter the labor market at an earlier age since they are generally exempt from and do not perform military service, unlike most of their Israeli Jewish counterparts, and they enter the labor force at a younger age. The decision follows a petition submitted by Adalah in its own name and on behalf of the Adva Center in August 2008. The petition was filed by Adalah Attorney Sawsan Zaher.

As Adalah emphasized in the petition, figures published by the Israeli Central Bureau of Statistics indicate that 38.5% of the workforce aged 18 to 24 years of age are Arab citizens of Israel.

In its decision, the court ruled that specifying a minimum age for payment of pension insurance does not discriminate against Arab citizens of Israel because "military service is one of the foundations of the social consensus in the State of Israel, as a right and a duty for every citizen or permanent resident… therefore the given average age for entering the labor market for the majority of young people… is the time when they are released from the army." Accordingly, the court decided that the ages stipulated in the Mandatory Pensions Agreement were legitimate.

In Adalah's view, the court totally ignored the fact that Arab citizens of the state are exempted by the state from serving in the military, while they comprise 20% of the population. As noted above, 38.5% of the workforce in the age group of 18-24 year- olds are Arab, almost double their percentage of the population.

Adalah accompanied the petition with an expert opinion prepared by economist Amir Zoabi. The opinion analyzed the discrimination that results from the age restrictions stipulated by the pension agreements, arguing that it was reflected in two main ways: economic losses in pension rights, and the risk of losing the ability to work. Economist Zoabi further argued that the economic losses for each male worker who starts working at 18 amount to NIS 332,000 at retirement age, while damages resulting from loss of the ability to work amount to NIS 14,508. Female workers who start working at 18 stand to lose NIS 174,000 at retirement age, while damages resulting from loss of the ability to work amount to NIS 9,672.

The petitioners argued that the selective application of the pensions agreement also discriminates on the basis of sex. "There is no connection between the ages that are excluded by the agreement – men under the age of 21 and women under the age of 20 – and the nature of the work and/or the attributes of the (male or female) worker," stated the petitioners.

Attorney Zaher emphasized that the discrimination on the basis of age, sex and national belonging that results from the pensions agreement, including the conditions of retirement, was contrary to the Law of Equal Employment Opportunities – 1988.

Labor law obliges employers to pay social allowances to every worker, regardless or his or her age. The only law that addresses the age of the worker is the Youth Employment Law – 1953, which was enacted in order to protect workers under the age of 18 and over the age of 15 and prevent employers from exploiting minors.

Case citation: Collective Agreement 52/09, Adalah v. The Ministry of Industry, Trade and Labor

The Petition (Hebrew)

The Labor Court's Decision (Hebrew)