Treasury seeks to freeze minimum wage and state pensions

Economic leaders discuss budget credit Cabinet spokesperson
Economic leaders discuss budget credit Cabinet spokesperson

The measures are opposed by Prime Minister Benjamin Netanyahu and the Histadrut.

The 2025 state budget is due to be presented to the cabinet for approval this Thursday, October 31. At a meeting today between senior Ministry of Finance officials and director general Yossi Shelley and Prime Minister Benjamin Netanyahu's senior economic advisor Prof. Avi Simhon, efforts will be made to get the prime minister to agree to some of the more controversial planned cuts.

These include freezing the minimum wage and state pensions, which are due to be revised upwards on January 1, 2025. However, both measures are seen as unpopular by hitting the most disadvantaged sectors of society, while the Ministry of Finance remains eager to push ahead with the cuts, which would save the state billions of shekels but hit workers and pensioners.

Freezing the minimum wage alone would save the Ministry of Finance NIS 1.2 billion. The salary structure in the public sector means that raising the minimum wage increases the net income even for many employees who actually earn significantly more than the minimum wage. This is the main reason that the Ministry of Finance wants to cancel the upcoming automatic update of the minimum wage. However, the decision, which targets the public sector, would in effect harm all workers in the country who earn minimum wages.

The minimum wage currently stands at NIS 5,880 per month. It is linked to the average salary in the economy (at a rate of 47.5%), which increased by about 6% in the last year to a level of about NIS 13,600. If this pace is maintained until the end of the year, freezing the minimum wage would prevent workers from an increase of more than NIS 300 per month. It should be noted that the Histadrut also defined the freezing of the minimum wage as crossing a red line, as part of the negotiations they are conducting with the Ministry of Finance. Combined with the opposition by Netanyahu and his entourage, it now seems that its chances of passing are relatively low.

Published by Globes, Israel business news - en.globes.co.il - on October 27, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Economic leaders discuss budget credit Cabinet spokesperson
Economic leaders discuss budget credit Cabinet spokesperson
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