Minister of Labor Yoav Ben-Tzur has approved the hike in the minimum monthly wage from April. The minimum wage will rise from NIS 5,572 to NIS 5,880 after the average wage in the Israeli economy rose to NIS 12,379 last month. The minimum wage will rise despite opposition from Israel Business Sector Presidency chairman Dubi Amitai who asked to delay the hike due to the burden it will place on businesses.
By law, the minimum wage in Israel is set at 47.5% of the average wage and due to inflation in recent years, the real minimum wage has been eroded by 3.6%, while the average wage in the economy rose by 5.7% - faster than inflation. Since the average wage has risen, the minimum wage now needs to be updated accordingly.
Amitai asked to freeze the hike due to the pressure on businesses to pay higher wages and the costs involved in this for the businesses that are suffering from lower demand due to the war. Nevertheless, it was decided to go ahead with the automatic update
The Ministry of Labor is ignoring the possibility that the average wage increase is artificial, due to the layoffs of low-wage workers during the war. This happened in a significant way during the Covid crisis and when a freeze was introduced on revising upwards allowances and the minimum wage in order not to increase the burden on businesses due to a statistical wage increase only.
The Ministry of Labor said, "In October 2023, the rate of people becoming unemployed was lower than during Covid, and the average wage for jobs in October did not increase sharply, and even fell. In addition, the economy began to recover, and in December 2023, the number of people on unpaid leave was 3% of the workforce." Therefore, the ministry concludes, "Spending on unemployment benefits did not significantly affect the average salary in the economy."
Ben-Tzur said, "The expected rise in the minimum wage is welcome and needed. The cost of living is skyrocketing and we must adjust workers' wages accordingly. The Ministry of Labor will continue to fight for the rights and dignity of workers."
Published by Globes, Israel business news - en.globes.co.il - on January 22, 2024.
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