Founded in December, 1920 at the Haifa Technion, the Histadrut was created as a trade union which would organize the economic activities of Jewish workers. Attempts at such organization had been made previously, but had failed due to the insistence of certain political parties on maintaining their own services for their own members. Realizing that the perpetuation of rival trade unions was of course counter-productive, efforts were made to establish a non-partisan, non-political organization. The organization would run activities such as the consumers union, the sick fund, and the employment exchanges. It was out of these efforts that the Histadrut was born.
The founding members were profoundly influenced by the Russian-Jewish socialist tradition characteristic of the second aliyah (1904-1914). They strongly believed in the continued building and settlement of Palestine, and were devoted to the revival of the Hebrew language and of Jewish culture. As strict socialists, they firmly believed that the representatives of the workers should not earn more than the workers themselves. The opening resolutions of the first Histadrut conference expressed their goals by stating:
In 1920, membership in the Histadrut numbered approximately 4,400.
In 1922, 8,394 of the 16,608 workers in the country were members of the Histadrut. 75% of immigrants arriving in the country also became members.
By 1927, the Histadrut claimed to serve 25,000 workers, encompassing 75% of the entire Jewish Palestine labor force.
The Histadrut has maintained a powerful position in Israeli society since its inception. Its policies have been guided by its goals of achieving full employment as well as security of tenure for its workers. In its drive towards full employment, the Histadrut itself became the largest employer in Israel. Its existence as employer as well as defender of the worker makes the Histadrut the very complex and unique organization that it is.