As hostilities continue in the latest Israel-Hamas war, staffing and workforce solutions firms are bracing for what could be protracted disruptions in the workforce.

The impacts of the war have rippled across the region’s workforce ecosystem. Israel reportedly canceled work permits for an estimated 4,500  Palestinian workers — many of whom are reportedly unaccounted for or displaced by the fighting, according to the Independent.

Israel so far has called up approximately 360,000 reservists, or nearly 8% of Israel’s labor force, based on Moody’s Analytics data. Such workforce reduction is expected to be disruptive to business in the country; however, the disruption could extend beyond Israel, as workers who were out of the country were also called back.

The high-tech industry, which contributes about a fifth of Israel's gross domestic product, is likely to be affected by the reservist call-up. High-tech has for a few decades been the fastest-growing sector in Israel and is crucial to its economic growth, accounting for 14% of jobs.

Prior to the conflict, the labor market in the Palestinian territories was performing poorly. Many Palestinians travel to work on a temporary basis in Israel, particularly in the construction sector where it is estimated they comprise more than 65% of the workforce.

Effect on Workforce Solutions Firms

Workforce solutions firms have also seen their workers called up. Raz Chorev, CEO of employer of record firm CWS Israel, said when workers are called up for reserve duty, this means less work is being done, which leads to delays in delivery and project completions, which also have an economic impact.

Chorev said he has been in regular communication with CWS Israel employees or their clients’ employees and aims to keep business as usual amid the conflict. Furthermore, the firm has taken a proactive approach and is educating its clients on what can and can’t be done in times of war, such as firing staff who are not able to show up due to reserve duty.

“Even though we are an employer of record in Israel, we have a co-employment arrangement,” Chorey added. “So we’ve got joint responsibility for the welfare of our employees.”

Employer of record Papaya Global, also based out of Israel, said approximately 50 to 60 of its 300 Israel-based employees have been called to military service. However, CEO Eynat Guez noted in an interview with Bloomberg earlier this month that its global structure enables it to run “business as usual” while its Israeli staff focuses on helping each other and the country.

Meanwhile, according to Reuters, global companies have also shut down their operations in Israel due to the conflict, with some asking their workforce to work from home. Others have temporarily closed down their businesses in Israel.

The Ecosystem’s Response

Workforce solutions firms have been focused on ensuring the safety of their staff.

ManpowerGroup, the third-largest global staffing firm, has operated in Israel for over 60 years.

“I have just spoken with our Israeli colleagues this morning to express our heartfelt support and thank them for working tirelessly to help those impacted and still run the day-to-day operations,” said Chairman and CEO Jonas Prising said in an Oct. 19 earnings call.

A spokesperson for Israel-based talent platform Fiverr said in its Oct. 16 earnings report, “As to the current war in Israel, our immediate focus is to help our employees, their families and the Fiverr community to safety and support those who have been directly impacted by the deadly attack at the border. At the same time, we are focused on running the business, and as of today, there has been no major interruption or material impact to our operations and business activity since Fiverr’s business is conducted primarily outside of Israel, and only a portion of our team is located in Israel.”

Talent platform Upwork said its focus has been on ensuring that its team members in the region are safe, and while CEO Hayden Brown sent an internal companywide earlier this month in which she shared ways the team can support humanitarian aid efforts, the company also told SIA that it is not commenting or making public statements at this time.

In a statement sent to SIA, Maya Huber, CEO and co-founder of TaTiO, an Israel-based work simulation platform, said, “What's become abundantly clear in these times is the importance of our team's emotional well-being. Given the situation and contrary to the norm for most Israeli companies, we’ve shifted to remote work. However, we’ve made it a point to touch base with every team member daily.”