Histadrut, employers groups agree to raise monthly minimum

Under the terms of the agreement, the minimum monthly wage will rise NIS 250 this July and NIS 200 in October 2012 to NIS 4,300.

January 2, 2011 22:50
2 minute read.

Eini Minimum Wage 311. (photo credit: Ofer Amram)

The Histadrut Labor Federation and employers organizations on Sunday signed a collective agreement to raise the minimum monthly wage from NIS 3,850 to NIS 4,300 by October 2012.

“The ability to pay is not always a given, and certainly not in a difficult economic period. Following serious negotiations we reached an agreement on numbers that we can support,” Federation of Israeli Economic Organizations chairman Shraga Brosh said Sunday at a press conference in Tel Aviv. “I am confident that employees will get to enjoy the benefit.”

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Under the terms of the agreement, the minimum monthly wage will rise NIS 250 this July and NIS 200 in October 2012 to NIS 4,300. The deal was signed by the Federation of Israeli Economic Organizations, the Federation of Israeli Chambers of Commerce and the Lahav Israel Association of the Self-Employed.

The Histadrut and employers organizations intend to ask Industry, Trade and Labor Minister Binyamin Ben-Eliezer to extend the agreement to cover the entire economy and submit a bill to legislate the minimum-wage hike.

“We understood that the best way to come to an agreement was only through cooperation and negotiation of both sides,” Histadrut chairman Ofer Eini said at the press conference.

“This is a respectable outcome, sharing the support of the industry, trade and labor minister, and I hope it will also be welcomed by the Finance Ministry.”

However, the Finance Ministry on Sunday reiterated its opposition to raising the minimum wage, warning that it would lead to an increase in unemployment.

“Government policy decisions taken over the past two years have strengthened the labor market and have led to a significant decline in the unemployment rate and to an increase in the labor participation rate,” the Finance Ministry said in a press statement. “However, we are not past the global crisis. As the unemployment rate is deteriorating in many countries, and many governments are having to cut their budgets, we believe the decision to raise employment costs in the industrial sector quickly is likely to... cause an undesirable rise in the unemployment rate. Such a move would hurt the competitiveness of the Israeli economy, especially during a period of appreciation of the local currency.”

Last month, the Finance Ministry and the Histadrut agreed on a new wage deal in the public sector, according to which workers will receive a raise of 6.25 percent over the next three years.

In the past, the Bank of Israel opposed proposals to raise the minimum wage, instead favoring a negative income tax to improve the financial situation of low-income earners.

Welfare and Social Services Minister Isaac Herzog (Labor) on Sunday praised the agreement to increase the minimum wage but said it had shortcomings.

“This is an important and proper move to cope with the problem of poverty, but it is not complete without raising the income of thousands of single-parent families in Israel, who year after year are drawn into the poverty trap,” he said.

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