One of Israel’s veteran construction companies says the post-Oct. 7 overhaul of the country’s building workforce has produced an unexpected result: despite higher labor costs, productivity, quality and safety have all improved.

Zeev Salant, co-CEO of publicly traded Omer Construction and Engineering, told Globes that the company estimates output is now roughly 30% higher than before the war. Palestinian crews previously faced lengthy commutes and generally wrapped up work by late afternoon, he said. Foreign crews now begin around 6:30 a.m., continue into the evening and frequently work Fridays, allowing projects to move faster.

Baruch Hadad, Omer’s other co-CEO, said the transition has also improved construction quality and reduced the amount of managerial oversight needed on sites. Salant went further on safety, saying foreign workers have proven more disciplined and easier to manage under strict safety procedures. The executives argue that those gains can outweigh the higher wages associated with foreign labor.

The comments highlight how dramatically Israel’s construction industry has changed since Palestinian workers were largely barred from entering Israel following Hamas’s Oct. 7 massacre. The initial shock brought projects across the country to a near-standstill, forcing Israel to rapidly expand recruitment from countries including India, Sri Lanka and Uzbekistan.

By the end of 2025, the increase in foreign and Israeli construction workers had replaced roughly 90% of the Palestinian workforce lost after the war began, according to the Bank of Israel. Foreign construction employment averaged about 75,200 workers, up roughly 44,500 from prewar levels, while Israeli employment in the sector also increased sharply.

The transition has not eliminated the industry’s labor problem. The Bank of Israel estimated that construction still faced a shortage of roughly 30,000 workers as activity accelerated, with about 20,000 vacancies late last year. It also found that replacing Palestinian labor with Israeli and foreign workers increased employment costs.

Those higher costs remain a major point of contention. A representative of the Israel Builders Association recently told the Knesset that foreign-worker expenses can add roughly NIS 130,000 to the cost of an average apartment in the government’s subsidized housing program.

For Omer Construction, however, the operational calculation appears increasingly favorable. The company, which has operated for roughly four decades and went public last year, is now valued at more than NIS 2 billion and is expanding beyond contracting into residential development and urban renewal.

The broader question is whether Omer’s experience becomes the industry standard. If foreign crews continue delivering longer working days, higher productivity and better safety, Israel’s forced wartime labor shift could develop into a permanent restructuring of one of the country’s most important industries.