An internal document reveals that 56% of employers ignore the Minimum Wage Law. Most of these employers are in the business sector, but some are in the public services sector. Figures also indicate that a raise the minimum wage affects only 10-15% of employees, about 250,000 people, who are unionized or work in registered jobs.
The minimum wage does not affect about 700,000 employees, a quarter of Israel’s work force, who earn a gross monthly salary of less than NIS 2,000, according to the Central Bureau of Statistics. It also turns out that the biggest problem is not the level of the minimum wage, but the lack of enforcement of the law by the government. When the labor section of the Ministry of Labor and Social Affairs was transferred to an expanded Ministry of Industry, Trade and Labor, enforcement of the Minimum Wage Law was curtailed, and the number of inspectors cut from 65-80 to 20.
On Tuesday, the Bank of Israel announced its support for raising the minimum wage. In a special press release, the bank said it supported a measured rise in the minimum wage, and that it ought to be raised gradually, in line with economic growth and improved worker productivity. The Bank of Israel cautioned that a raise in the minimum wage should be carried out in parallel with a redefinition of the components of the minimum wage to include other salary components that are not reimbursements or incentives, such as seniority, premiums and bonuses.
In its press release, the Bank of Israel did not mention a figure or rate for a desirable minimum wage hike, but an analysis of data imply a rise of 6.5%, or NIS 230-250, following the rise of 3.5%, NIS 120, to NSI 3,470, carried out in April. Data indicate that labor productivity in Israel rose 10% over the past two years, while the minimum was raised by only 3.5% in April.
Data indicate that over one million wage-earners, 40% of the labor force, earned less than the minimum wage of NIS 3,450 in January. This figure includes 700,000 employees who earned an average gross salary of NIS 1,964, 43% of the minimum wage.
Published by Globes [online], Israel business news - www.globes.co.il - on April 20, 2006
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