Israel's Ministry of Finance has issued a memorandum for the Average Salary Law in an attempt to avert a sharp rise in budgetary costs following the revision of the average salary in the economy. The expected rise in the average salary stems from the fall in the number of employees, with most of those placed on unpaid leave or fired earning lower than average salaries.
The upward revision of the average salary in the economy would create a distortion and budgetary costs with ramifications that would make it difficult for the economy to recover from the Covid-19 crisis. The Law proposes freezing the substantial revisions upwards expected following publication of the average salary on January 1, 2021 by the National Insurance Institute, which links the figure to payments such as the minimum salary, payments to the National Insurance Institute, the rise in the cost of living, municipal tax and electricity rates. The memorandum of the Law seeks to prevent a situation in which the population that is not influenced by the average salary, will not only be harmed by the rise, but also hit by a fall in their purchasing power.
If the bill is not passed into law, the Ministry of Finance estimates that the rise in the average salary would also cost the state between NIS 7 and 9 billion.
Published by Globes, Israel business news - en.globes.co.il - on November 23, 2020
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