Shekel money bills.
(photo credit: REUTERS)
The Histadrut labor federation and the Manufacturers Association of Israel agreed on Monday to extend planned increases in the minimum wage to NIS 5,300 a month by the end of 2017.
In December, on threat of a general strike, the two sides had agreed to raise the minimum wage from the current NIS 4,300 to NIS 5,000 in three steps over a two year period.
The first incremental increase in that deal, to NIS 4,650, is scheduled to go into effect on Wednesday. The next step, planned for August 1, 2016, would raise it to NIS 4,825. The final step on January 1, 2017, would increase it to NIS 5,000.
Monday’s agreement would add a fourth increase on December 1, 2017, to NIS 5,300.
The agreement, while not bearing the force of law, will make another legal increase highly likely, given that the Histadrut and the manufacturers association are the two largest pressure groups on opposite sides of the issue.
Shas has made a further increase of the minimum wage a precondition for joining a governing coalition.
The fall of the governing coalition in the middle of December’s negotiations helped usher in an agreement on most, but not all, of the associated issues. The cabinet and Knesset approved the agreement the following month, even as the election campaign raged. The attorney general, however, excluded a clause that would tie the minimum wage to 52 percent of the median income.
In Monday’s agreement, the two sides stipulated that the future minimum wage would be tied to the median at 47.5 percent, with further increases being given for increases in total economic productivity.
“By 2017, the minimum wage will rise a quarter from its current level. That is an unprecedented rate, which is essential for decreasing social gaps and increasing equality,” said Histadrut chairman Avi Nissenkorn.
Economists disagree about the role of the minimum wage in the economy. Some agree that it helps reduce social gaps, but others argue that it has negative repercussions, such as increases in unemployment or price levels.