A few points:
1). It is a SPECIFIC israeli COMPANY, not the israeli government, that has this requirement. This is no more official government policy than, say, Wal-Mart's policies are official US government policy.
2). This certainly isn't common practice. With all probability, the reason this item is "news" in the first place is precisely due to the "man-bites-dog" character.
3). FWIW, most israelis who heard of this story surely consider it bizzare, as well.
4). As the story shows, while some israeli companies abuse foreign workers, other israelis are their advocates and are against these abuses.
I am not claiming this didn't happen, of course, or is good thing--just that it is hardly some sort of volkish government policy, but instead, a bizzare action by a private corporation that's opposed by most israelies.