The ministerial legislation committee today approved a bill to gradually raise the minimum wage to NIS 4,600 a month. Under the decision, further treatment of the legislation must be in coordination with the government.
The private member's bill proposed by MK Amir Peretz (Labor) will raise the minimum wage in three hikes: to NIS 4,100 three months after the bill is passed; to NIS 4,350 three months later; and to NIS 4,600 after 15 months.
The bill was passed with the support of Shas ministers Yaakov Margi and Meshulam Hahari, ministers from the Likud, Israel Beiteinu, and Labor Party ministers Minister of Agriculture Shalom Simhon and Minister of Social Affairs Isaac Herzog. The Ministry of Finance, the Ministry of Justice, and the Ministry of Industry, Trade and Labor all oppose the measure.
The Ministry of Finance says that raising the minimum wage will raise the cost of labor, and will probably lead to layoffs, even by sound companies. The ministry said that an increase in unemployment will lead to higher welfare payments, which will further burden taxpayers. The ministry expressed concern that the measure could even cause the transfer of factories to India, China, and Malaysia, a process that has already begun recently.
The Ministry of Finance added that the economic review of Israel by the OECD explicitly said that Israel's minimum wage was high, and ought to be lowered. The report called the situation in Israel problematic.
Published by Globes [online], Israel business news - www.globes-online.com - on May 23, 2010
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