With as many as 60,000 Arabs crossing into Israel daily to work, there are growing fears here that the country's economic woes may soon begin to force layoffs that could fuel more political unrest in the occupied territories.
So far, Israel's economic tailspin has had little effect on the West Bank and Gaza Arabs who commute to jobs across the border, despite steadily rising unemployment in the Jewish work force.
But Arab labor leaders and social workers say they are afraid that if joblessness in Israel spreads to agriculture and the construction industry -- the two principal mainstays of Arab employment -- the economic consequences in the West Bank and Gaza Strip could be severe.
Moreover, officials in the military government in the occupied territories have expressed concern that any sudden increase in Arab unemployment could create a fertile breeding ground for political dissent unless public works projects were created to absorb the workers.
Given the belt-tightening budget imposed by the government of Prime Minister Menachem Begin in the face of 111 percent annual inflation, it appears unlikely the treasury could afford such public works projects both within Israel and in the West Bank and Gaza Strip.
Judged against standards elsewhere in the world, Israel's unemployment problem is small, with only 40,000 Israelis unemployed -- 3 percent of the total work force of 1.3 million workers.
Yisrael Goralnik, director general of the Ministry of Labor and Social Affairs estimates that if the government's austerity measures are met this year, another 25,000 Israelis would be jobless, for an unemployment rate of 5 percent.
According to ministry spokesman Abraham Hoffman, most of the unemployed are new immigrants, recently discharged soldiers and women seeking their first full-time jobs. The ministry estimates there are only 8,500 Israelis who have been registered as unemployed for more than six days.
What is disturbing to Israelis -- and indirectly to Arab workers across the pre-1967 war border -- is that joblessness is a relatively new phenomenon here and that unemployment is likely to rise. Job seekers have doubled in the last year.
Throughout Israel's 32-year history, a shortage of manpower has existed in almost every job category. Because the growth of industry and agriculture traditionally has outpaced the labor pool, there has been an abundance of jobs for West Bank and Gaza Arabs since Israel captured the territories 13 years ago.
But, also traditionally, the least desirable and lowest-paying jobs in Israel have gone to Arabs willing to commute across the border -- construction laborers, crop pickers, hotel service employes, sanitation workers and the like. The main employment centers for Arabs are Tel Aviv, Jerusalem and the agriculture-rich Sharon Plain in central Israel.
Although 47,000 of the Arab workers found their jobs through the Labor Ministry, making them eligible for paid social beneifts, West Bank and Gaza Strip trade unions have been boycotted by Israeli employers. They prefer to deal with the Histadrut, Israel's national labor federation. As a result, the Arab workers in Israel work without union protection, and their jobs generally are considered to be the most vulnerable in difficult economic times.
An Arab social worker, who is employed by the Israeli government and asked not to be named, said, "If the Israelis start firing people, guess who will be the first to go." He said the effect of joblessness on Arab workers is all the more debilitating because they do not receive unemployment compensation as Israelis do.
Hoffman maintained that as long as Israel remains a major agricultural exporter and as long as construction remains active, layoffs of Arab workers should not increase significantly.
"If you begin to read in the newspaper that the government is slowing down construction, then many Arabs would lose their jobs," Hoffman said.
However, labor officials conceded that if unemployment persists the likelihood increases that Israelis will begin accepting the less desirable jobs that they once left to the Arabs. Then, officials said, industrial plants may decide it is better to hire Israeli manpower than to bus Arab day labor in from the West Bank.