This is the third installment of Moment’s series on Israel’s 1.5 million Arab citizens. The first traced the evolution of one family’s identity from Arab to Palestinian-Israeli. The second explored the separate and unequal education of Israel’s Arab children. This story delves into the economic disparity between Israel’s Arabs and Jews, with a special focus on jobs in the high-tech sector. It is written by David B. Green, an editor and writer at the English language edition of Haaretz. Read the first two stories here and here

THE ARAB GLASS CEILING

The overtrained and underemployed among Israel’s Arabs long for a good job—and equal opportunities. after decades, Israelis—Jewish and Arab—are working together to crack the glass.

The coffee shop in Baka al-Garbiyah, about 40 miles from Tel Aviv, is sparsely furnished with just a few tables and fluorescent lights. Unlike crowded, fashionable cafés in Israel’s Jewish cities with scurrying waitstaff and seemingly endless menus, there is no sign of food and only a handful of customers. A flat-screen TV hanging from the ceiling is tuned to a Syrian station broadcasting footage of pilgrims circumnavigating the Kaaba in Mecca, where the annual Hajj is underway. Running across the bottom of the screen are up-to-date prayer times for various destinations around the Muslim world.

The coffee shop in Baka al-Garbiyah, about 40 miles from Tel Aviv, is sparsely furnished with just a few tables and fluorescent lights. Unlike crowded, fashionable cafés in Israel’s Jewish cities with scurrying waitstaff and seemingly endless menus, there is no sign of food and only a handful of customers. A flat-screen TV hanging from the ceiling is tuned to a Syrian station broadcasting footage of pilgrims circumnavigating the Kaaba in Mecca, where the annual Hajj is underway. Running across the bottom of the screen are up-to-date prayer times for various destinations around the Muslim world.

Drinking coffee across the table from me is Afif Abu Much, 29, a graduate of the Technion-Israel Institute of Technology, the country’s most prestigious engineering institution. One of Israel’s 1.5 million Arab citizens, he’s a good-looking man with a shaved head, sporting a very light mustache and beard. Baka al-Garbiyah is his hometown: It’s a small city of 30,000 Arabs located in what is known as “The Triangle,” a concentration of Israeli Arab towns and villages to the southeast of Haifa, where some 20 percent of the country’s Arab citizens reside.

Abu Much (pronounced mookh) commutes each day from Baka al-Garbiyah to his job as a systems engineer at SAP Labs Israel—owned by the Germany-based SAP, the world’s largest enterprise-software company—situated in a high-tech industrial park in Ra’anana. He takes the commute in stride because as an Arab, he has learned, he is fortunate to have a job in his field. Always “super-good in science,” he was accepted to the Technion at a time when increasing numbers of Arab students have gained admission to Israel’s elite universities. But upon graduation, he found that his top-notch credentials didn’t translate into a position as an engineer. “I applied to jobs at companies in Haifa, Herzliya, Yokneam, Yavne, Jerusalem, Rosh Ha’ayin, Rehovot and Ra’anana, all over the country: None of them were interested.” After a long year, SAP hired him for a trial period in an installation-services job for which he was overqualified. With his foot in the door, he was promoted to quality assurance, then finally to integration engineer, working largely on software for cloud computing—Internet-based storage—together with a SAP team in Palo Alto, California.

Thousands of qualified Arab engineers in Israel are either unemployed, working in unrelated fields or teaching high school, despite the fact that technology is the country’s main growth industry, accounting for 40 percent of Israel’s exports. (Israel is second only to the U.S. in the number of firms listed on the NASDAQ exchange.) Trained engineers are in such demand that approximately 8,000 highly skilled jobs in Israeli firms have been outsourced to India, China and Eastern Europe in recent years.
In general, Arabs, ultra-Orthodox Jews and Ethiopians who have academic and professional degrees face obstacles finding work in the mainstream, but Arabs have it the worst, according to a study conducted last year by the Kiryat Ono Academic College. Jewish employers responding to the survey revealed a general unwillingness to even consider hiring Arabs, whereas ultra-Orthodox and Ethiopians were more likely to face difficulties getting promoted. Banks, law firms, advertising agencies and even the civil service are largely closed to Arabs. Mohammad Darawshe, co-executive director of the Abraham Fund Initiatives, an NGO that works toward the integration of Arabs into Israeli society, notes that some 15,000 Arabs with university degrees are unable to find work in their fields, or any work at all. One anomaly is in the field of healthcare: Not only do all Israelis have equal access to the country’s public medical institutions, but Arabs are employed at every level of the system, including as physicians and administrators.

Blue-collar jobs are also scarce: Positions in agriculture, textiles and construction, traditional areas of employment for Arabs, are either being shipped overseas or going to foreign guest workers from places such as Thailand and Romania. According to Israel’s Central Bureau of Statistics, 41 percent of Arabs age 15 and older were employed in the civilian workforce in 2009, compared to 59.6 percent of their Jewish counterparts. Markedly, only 20 percent of Arab women were employed, compared with 60 percent of Jewish women.

Although he has a job, Abu Much has made helping other professional Arabs find employment his personal mission. He speaks about the need for diversity in the workplace in panel discussions sponsored by a group called Maala: Business for Social Responsibility; he writes occasional columns for the business daily Calcalist on the subject, and he volunteers at the employment center run by Kav Mashve, a non-profit organization that helps professionally trained Arabs find work in the business world. Last summer, Abu Much literally became a poster boy for the cause, allowing his photo to appear in Arabic-language ads for a private computer institute on the sides of buses and on the Internet, with the novel slogan “Yes, We Can.” He explains that “if it helps the Arab sector, I’m ready to do it.”

He is a calm man with a quiet voice, but as he speaks to me about the disparities between Arabs and Jews in Israel, he oscillates between great hope for the future—not just his own but for his people—and a weary, embittered frustration. He talks enthusiastically about Israel’s ethnic diversity, which he calls “amazing.” With the cultural and religious variety of the population, “we could really do something huge,” he says. But he also laments what he sees as Israelis’ perverse inability to see their country’s heterogeneity as an advantage. “Instead of presenting ourselves to the world as a diverse population, we spend our time trying to screw one another.”

Abu Much’s family has lived in Baka al-Garbiyah for generations. His parents, Muslims, run a minimarket next door to the family’s home. Like them, Abu Much plans to raise his family in town. He is building a house nearby for himself and his fiancée, Sama Ejmiel, who is completing her master’s in physiotherapy. It is common for Arabs, even those who have found work in other parts of the country, to make their homes and raise their families in the towns where they grew up, returning there on weekends, if not each evening.

Like most Arab towns, Baka al-Garbiyah does not have the amenities that Jewish towns of a similar size do. Arab municipalities receive smaller budgets from the state and none or little of the largesse bestowed by Diaspora Jewry on Jewish communities. With less money at their disposal, they have weaker governments (though that problem is not limited to budgets; mismanagement and corruption are also issues) and by extension, infrastructure—schools, streets, community centers and parks—is inferior.

National programs to spur development have generally been lopsided in favor of Jewish communities, says Ron Gerlitz, the co-executive director of an organization called Sikkuy [Hebrew for “chance”], which was founded in 1991 to advance the cause of equality between Israeli Jews and Arabs. The government, he says, has long helped establish industrial parks in Jewish municipalities. The placement of such zones, a source of both employment and local tax revenues, is decided at the national level, and as Gerlitz notes, “only 1.5 percent of the country’s industrial and infrastructure lands are situated in Arab towns.” There are even cases of industrial zones, such as in Kafr Qassem, near Tel Aviv, and in Sakhnin, in the Galilee, being established within the geographic jurisdiction of Arab towns but annexed for tax purposes to the adjoining Jewish communities they serve.

As Israel has become more prosperous, so have its Arab citizens, who make up 20 percent of the population, but not nearly at the same rate as Jews. While they are economically better off than their counterparts in many other Middle Eastern countries, they lag behind Jews by almost every social or economic measure, a fact that was driven home earlier this year by the Organization for Economic Cooperation and Development (OECD), an organization of developed countries, in a report issued shortly before it welcomed Israel into its ranks in May. Entitled “Israel: A Divided Society,” it pointed to the growing gaps between Israel’s richest and poorest citizens and noted that two substantial population groups, Arabs and ultra-Orthodox Jews, have been left behind as the national economy has expanded dramatically. Among the worrying trends the OECD pointed to: The rate of Arab families living below the poverty line in Israel (some 50 percent) is three times higher than among Jewish families.

The points that the OECD made echo those of a 2003 Israeli judicial commission headed by then-Supreme Court justice Theodor Or, appointed after police killed 13 demonstrators amid rioting in Arab communities in October 2000. The commission looked not only at the violence and its causes, but also at the inequalities faced by Israeli Arabs and offered recommendations for improving the situation. The government of Ariel Sharon endorsed the findings but never implemented them, which is why some regard the past ten years as a “lost decade” in terms of Arab advancement.

Nevertheless, there are signs that both the Israeli government—led by a conservative Likudnik, Benjamin Netanyahu—and the country’s business sector have finally heard the warnings offered by the Or report and the OECD, as well as those proffered from NGOs including The Abraham Fund, Sikkuy and, more recently, a task force made up of 90 American Jewish foundations. Last winter the government approved an 800-million shekel ($225 million) plan for economic development in the Arab sector. The plan includes public investments in infrastructures and job training. At the same time, the government announced its intention to find a partner to join it in establishing an investment capital fund to finance business ventures in the sector.

Avishay Braverman is a rising star in the Labor party, which is looking for new leadership after falling to its lowest level of support ever in the 2009 election. He is a cabinet member in the coalition government of Prime Minister Benjamin Netanyahu in which he serves as minister “in charge of minorities.” An economist by training with a Ph.D. from Stanford University and 14 years experience at the World Bank, Braverman entered politics in 2005 after 16 years as president of Ben-Gurion University of the Negev, where he is widely credited for the Beer Sheva–based school’s rapid growth and development. During his tenure, for example, the university opened its doors to a number of qualified Bedouin students from the surrounding area, a group that until recently had very limited representation in Israeli institutions of higher learning.

“Israeli Jews just don’t know Israeli Arabs,” says Braverman. “They are so ignorant that they think most of them are a fifth column, or fundamentalist Muslims.” He is well aware that those Jews include some of his cabinet colleagues, like Deputy Prime Minister and Foreign Minister Avigdor Lieberman, who appeared before the U.N. General Assembly in September to present a plan to swap the Triangle with the Palestinians for settlements, a proposal that the prime minister had to disavow publicly a few days later. Many Jews also have concerns about Arab loyalty. “But eventually,” says Braverman, “you have to choose your path. Israel is a liberal democracy. And democracy does not just mean majority rule; you also have to respect minority rights.”

As a Labor man, it is not surprising that Braverman approaches the question from the perspective of a liberal Zionist, whose world view is founded on the belief that it’s only fair—and consistent with Jewish values—for the Jewish state to rectify the material inequalities in the treatment of its Arab citizens. He is also convinced that both Jewish and Arab citizens of Israel want their country to grow economically: “What people want is a strong economy, education and respect. Believe me, if they get that, they will support it,” he says, sounding like the candidate he would like to be in an upcoming election.

Braverman is quick to give credit to Ayman Saif, the “brilliant” young Arab economist who, as head of the government’s Authority for the Economic Development of the Arab Sector, designed the plan. The department is part of the Prime Minister’s Office but is located in a rented space in Jerusalem’s Talpiot Industrial Zone on the other side of town. His office suite is marked only by a piece of paper taped to the outside door.

It was already late in the workday when I arrived, and after we spoke for an hour or so, Saif seemed to be in a hurry to head home to his newborn child. He lives in Arara, the town in the Triangle where he grew up and where his extended family remains. He returns home every night, traveling via Road No. 6, the Trans-Israel tollway, where he “only” has to travel an hour and a half each way.

Saif was not interested in discussing politics and was anxious to stress the support he’s received, not only from his boss, Braverman, but also from the prime minister and his Likud colleagues in the cabinet. He came across as sincere when he stressed his belief that economic progress, rather than political change, is what is needed to make Arabs full members of Israeli society and improve their relations with the Jewish majority.

“What does the Arab citizen want?” he asked rhetorically. “What do I want? No, forget about me, I’m 41, but what about my children? I have a girl born a week ago. I want her to have the same opportunities that your child, who is Jewish, has. Opportunities for education, to work and to live at a similar standard of living. That’s all I want. Of course, I also want there to be peace with the Palestinians. But as a citizen, I want equal opportunity for my children.”

His plan focuses on 13 of the largest, most stable and best-run Arab towns and cities, including Sakhnin and Umm al-Fahm in the north and the Bedouin city of Rahatw in the south, which between them are home to about one-quarter of the country’s Arab citizens. Saif said the best way to understand its scope was to imagine its typical client being an Arab woman. “In order to be able to work, she needs to be able to put her children in daycare,” he began. “So the program has a daycare component. She may need professional training or retraining, so we will provide that too. Of course, she needs a place to work, so the program will include investment in establishing industrial zones in the towns, and drawing businesses to them. And she needs to be able to get to and from work, so we will have the element of public transport, since it’s completely lacking within Israel’s Arab towns.” The program also calls for the creation of authorities in the individual towns that will provide incentives and advice to entrepreneurs who want to establish new businesses; the construction of apartment buildings and arrangement of mortgages; and investment in improving police services in the Arab sector, which suffers from high levels of violent crime.

Saif was confident that the plan would be a success even though, aside from the brief period of Yitzhak Rabin’s second term as prime minister (1992-95), when it is generally acknowledged that things improved for Arabs, previous plans were not implemented. In some cases, the funds were never even transferred by the Treasury to the intended authorities. Saif explained that he had studied those past failures and devised the current effort with them in mind. “The program was designed, and it’s important to stress this, in full cooperation with the finance minister; and with the Industry, Labor and Trade Ministry; the Housing Ministry; the Transport Ministry; and also the Interior Ministry,” he said. “So I’m not worried.”

He was also certain about the huge potential for Arab economic growth. “We’re moving from a traditional economy, based largely on agriculture and heavy industry, to one based more on services, commerce and in recent years, several particular areas” including the food industry, plastics, furniture and tourism. “And of course, high-tech.”

I drive to Nazareth—the country’s largest Arab city, with a population of some 70,000—to visit Galil Software, a two-and-a-half-year-old software company. There I meet CEO Inas Said, 45, an Arab engineer who spent two decades working in Germany and in the U.S. He says that until a recent flurry of attention in the press, most Jewish executives seemed unaware of the potential within the Arab community. “People would say, ‘There’s good hummus in Nazareth, but no business,’ not to mention many skilled technology professionals,” says Said, adding that the reluctance to hire Arabs comes from “ignorance, fear of the other, and the fallacy of attributing bad things to an entire community.”

Arab entrepreneurs who want to set up shop and establish start-ups in the Arab Galilee face large, systemic obstacles. “Until two years ago, there was no capital available,” says Said. “No venture capital funds, no investment capital was being invested in Arab society—not by ‘angels’ and not by institutional investors.” Additionally, he says, “A high-tech company in Nazareth could penetrate the market in the U.S.—one medical equipment firm met the standards of the FDA—but not locally.”

This is changing. Said’s Galil Software is one example. It was founded by Moroccan-born, Canadian-raised Jimmy Levy, a veteran Jewish high-tech entrepreneur who used to direct the mobile-content division of telecommunications software giant Comverse. “At Comverse,” he says, “I was responsible for some of the outsourcing, some of which went to India. And we had discussions about that: Why India? They were great companies, but we wondered, couldn’t we do it closer to home?”

Levy saw that there were many qualified software engineers in Israel, particularly Arabs in the north, who were unemployed or underemployed. Not having served in the army, where many Jewish entrepreneurs receive their initial training and, perhaps even more importantly, establish personal networks that will serve them throughout their careers, they are at a disadvantage before they even arrive for an interview.

Even before he had set up a company, Levy began collecting résumés. When he had about 80 in hand, he invited some 35 applicants to meet with him in a Haifa coffee shop. “Most of them were Arab, and I knew very quickly that I would have hired the majority of them at Comverse. They were people who had studied at the Technion and at Hebrew University and Tel Aviv University.”

Even after Levy stopped actively seeking CVs, they kept pouring in. Consulting with Jewish colleagues in the software field, he became convinced that if he set up a software firm, he would find clients. “People said to me, if you come to us with a good value proposition,” they would bite.

And bite they did. After only two years, Galil has contracts with GE Health Care and with Israeli firms ECI (networking infrastructure), AMDOC (business support software), Voltaire (networking fabric switches), DBMotion (healthcare software) and JumpTap (mobile advertising), among others. Now the company is expanding into a third office space in Nazareth and has more than 130 engineers, including around a dozen Jewish employees. Levy insists that he is looking to maximize profit before anything else and is convinced that his strategies at Galil make good business sense. “The cost of an individual engineer in India may be lower,” says Inas Said, “but when you add in the total costs, this differential shrinks. We can provide services at about 30 percent savings” over companies in central Israel.

In 2009 the government solicited bids for a partner to establish Israel’s first private equity fund specifically devoted to investing in the Arab sector. It chose the veteran private fund Pitango Venture Capital—founded and managed by Shimon Peres’ son Chemi—which raised another 97 million shekels ($27 million) in addition to the 80 million shekels ($22 million) the government put in. According to a press release, a new Pitango Fund subsidiary, called Al Bawader [Arabic for “buds”], aims to bridge the gap between entrepreneurs and investors and is hoping to capitalize on what it deems to be the Arab sector’s “strong ties” with “the expanding markets of the Middle East and the Arab world.”

Jimmy Levy, who is a co-founder and co-managing partner of Al Bawader (together with Habib Hazan, a former McKinsey and Co. consultant who also serves as co-chair of Kav Mashve), says it will soon be announcing its first round of investments. For that reason, he was reluctant to provide many details, but he did hint that he saw enough entrepreneurial skill among Arabs that he expected to soon see start-up firms offering products, and not just engineering services. Al Bawader is slated to invest 40 percent of its capital in technology firms, but Levy stresses this is far from the only area with the potential for growth. He mentions the same fields as Ayman Saif—tourism, food and plastics production—as holding promise and also notes the potential for start-ups based around the life sciences.

Not that it’s easy to start up a business in the Arab sector. Said explains how, in a place like Herzliya, a business can outfit an office within 24 hours. “Here, in Nazareth, it took us three months to set things up. It took me three months to convince Bezeq [the country’s principal phone company] to install a fiber-optics line. And this building is the only one in the Arab sector with built-in sprinklers for fires.”

At the coffee shop in Baka al-Garbiyah, Afif Abu Much tells me how lucky he is because not only does he have a job as an engineer, but SAP Labs Israel encourages his community work. He has warm words for the company’s general director, Mickey Steiner, who he says “is like a father to the people who work for him.” Every so often, Steiner and other senior managers invite staff engineers to meet with them for “morning coffee,” to discuss their questions and suggestions about the company’s work. Describing it, Abu Much becomes wistful: “If only the government would adopt an idea like ‘morning coffee’…if they wouldn’t treat us like suspects, like traitors.

“What bothers me is the feeling that I don’t count. I don’t mind being a minority, but you have to treat me with respect,” says Abu Much, who plans to get married in the spring when his three-story house with an adjoining garden is finished. But he makes it clear that the problem is a two-way street. He is convinced that some Arabs don’t do enough to exploit the opportunities that exist. “It’s true that the state doesn’t let members of minority groups advance and integrate,” he says. “But Arabs need to do some soul searching and begin to act on their own.” It can be easier to blame the system than to persist in contacting Kav Mashve’s unemployment hotline. “If I were unemployed, I would be calling up the hotline every day. If you don’t help yourself, I can’t help you.”