Israel's cabinet approved issuing 3,500 additional permits for Palestinian workers in Israel's manufacturing and services sectors, increasing the number to 12,000 to help relieve a shortage of skilled staff, the Economy Ministry said on Sunday.
Workers from the West Bank and Gaza Strip, territories which Israel captured in the 1967 Middle East War, require permits to cross checkpoints and enter Israel where wages are higher.
Israel employs nearly 100,000 West Bank and Gaza Palestinian workers, according to the Israeli Population and Immigration Authority. But most work in construction or agriculture, with only a comparatively small number given permits for jobs in factories or the services sector.
Israel's jobless rate is around 3%, and the economy ministry said the existence of 14,000 vacancies in manufacturing was creating a barrier to economic growth.
Economy Minister Orna Barbivai said in a statement that in addition to the extra work permits for Palestinians, the ministry plans to work to increase manufacturing productivity through automation and digitalisation.
The quota for Palestinian workers in manufacturing will automatically be reduced if the annual average unemployment rate in Israel rises above 7.5%, the government said.
Ron Tomer, head of Israel's Manufacturers' Association, called the decision to boost numbers of Palestinians allowed to work in Israel a "lifeline" for the industrial sector given severe shortages of workers.
"There are currently thousands of open jobs that manufacturers find difficult to fill, and we believe that increasing the quota will help reduce the severe shortage at least in the short and medium term and help the industry continue to operate and grow in Israel," he said.