Banks raise minimum wage to NIS 5,000

banks

The minimum wage at several banks will be raised immediately, instead of in four installments spread over 2015-2017.

In contrast to the rest of the economy, some banks are raising the minimum wage for their employees to NIS 5,000 immediately. Starting in March, several banks are raising their minimum wage from NIS 4,300 to NIS 5,000. Under the law approved a few weeks ago, the minimum wage is due to rise in four installments by 2017, but several banks have decided to advance the date.

The two largest banks, Bank Hapoalim (TASE: POLI) and Bank Leumi (TASE: LUMI), have decided to raise the minimum wage for both their employees and their contract workers. 1,100 regular employees and 800 contract workers at Bank Hapoalim will benefit, as will 1,400 regular employees and 900 contract workers at Bank Leumi.

In some cases, the gross pay of the employees in question is already more than the minimum wage, but their base pay is still less than NIS 5,000 per month, and they will therefore receive a raise. At most of the banks, the base salary component, on which pensions are paid, is relatively low, with the bank granting various supplements (on which no pension is paid in most cases) that bring salaries to a more reasonable level.

At Bank Hapoalim, for example, there are employees whose base pay varies around the minimum, but whose supplements total NIS 8,000 (meaning that their supplements are 60% greater than their base pay). These employees will also be granted a raise in their base pay.

Bank Hapoalim said in response, "The bank is proud of its decision to raise the minimum wage in a single installment, rather than spreading the increase over the next two years. It was clear to us that all the employees deserve this, including those working through external companies, and we see no reason to distinguish between one employee and another, because the right to earn a decent living belongs to all.

Bank Leumi's decision to raise the minimum wage was part of the new wage agreement signed with the workers' committee several weeks ago. It turns out, however, that in addition to salary raises, Bank Leumi is also raising the salaries of contract workers, starting in March.

First International Bank of Israel (TASE: FTIN) also decided to raise the minimum wage for its employees to NIS 5,000. First International Bank has almost no contract workers, and relatively few employees who will benefit from the increase.

Israel Discount Bank (TASE: DSCT) has not yet raised its minimum wage, but the matter is currently under discussion at the bank. It is believed that the bank is favorably disposed towards raising the minimum wage to NIS 5,000 for both its regular and contract workers, but it is not yet clear when an official decision on the matter will be made.

The minimum wage hike is also on the agenda of Mizrahi Tefahot Bank (TASE:MZTF), but it will take more time for this bank to grant the raise. The bank is due to formulate a new wage agreement with its workers committee (although it is unclear how far the negotiations between the parties have progressed), and the new agreement will probably include a minimum wage hike. Mizrahi-Tefahot Bank has employees whose base pay is at the minimum wage level, but they also receive supplements, on some of which pension is paid, and the new agreement is expected to introduce order into the bank's salary calculations in order to determine who is entitled to a pay rise.

Published by Globes [online], Israel business news - www.globes-online.com - on March 3, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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