REFILE-Israel's central bank urges government to ease rules on Palestinian workers

(Removes redundant phrase "on Wednesday" in para 2)

JERUSALEM, Sept 25 (Reuters) - Israel's central bank on Wednesday called on the government to ease rules on Palestinian workers who often purchase work permits in the country illegally to bypass restrictions tying them to a single employer.

About 20,000 Palestinian workers, or 30 percent of the Palestinian workforce in Israel, pay a monthly fee to obtain a permit with one employer and then work illegally for another, research from the Bank of Israel showed.

With unemployment in the West Bank and Gaza over 30 percent, tens of thousands of Palestinians, most of them from the occupied West Bank, legally work in Israel in jobs providing higher pay than those in the Palestinian territories.

Three quarters of Palestinians who purchased work permits worked in construction, bank research showed.

It estimated annual revenue from the permit trade to be around 480 million shekels ($137 million), with about 120 million shekels in profits to permit traders.

The report said the 2,000 shekel monthly fee cancels out any worker income gains. Palestinians who purchased permits made 10,100 shekels on average per month compared to 7,800 shekels for those who obtained them legally.

The Bank of Israel urged the government to implement reforms to the work permit system that were approved in 2016 to allow Palestinian workers to work for different employers.

"(Cancelling) the obligation for a Palestinian worker to work only for a pre-defined employer is expected to enhance the efficiency of the allocation of Palestinian workers, increase their output and income, (and) significantly reduce the illegal trade in work permits," the bank said. ($1 = 3.5005 shekels) (Reporting by Rami Ayyub, Editing by Steven Scheer, William Maclean)