Raising minimum wage is not enough, says FICC

Raising minimum payment is not enough if available income of those earners did not gain, as well.

April 18, 2006 22:02
1 minute read.
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labor ad 298.88. (photo credit: www.avoda2006.org.il)


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As coalition talks reach a crossroads over the pace of increases to the minimum wage, the Federation of the Israeli Chambers of Commerce said raising the minimum payment was not enough if the available income of those earners did not gain, as well. "The principle rule has to be that the minimum wage, which the employee receives, will always be equal to net available income," said Uriel Lynn, President of the FICC. Therefore, the directorate of the FICC has formulated a proposal built upon a threestep program. First, the minimum wage would be raised to NIS 4,000 a month within one year according to a time framework that would be determined by employers and employees' unions. The next step would abolish national income and health taxes for those who do not earn more than NIS 4,000. As a result, those who earn NIS 3,500 a month would save NIS 122, while those on a monthly salary of NIS 4,000 would save NIS 140. Third, the FICC demands the abolition of union payments for operations, which are being imposed on the workers by labor unions. Kadima has accepted Labor's main coalition demand and campaign promise - raising the minimum wage - the head of Labor's coalition negotiating team, former justice minister David Liba'i, said this week. Labor is demanding the minimum wage be raised gradually from the current NIS 3,457 to $1,000 a month (roughly NIS 4,700). The party has called for the first raise of NIS 500 to take place in September, but Kadima has indicated that the party will not agree to the September demand. Kadima MK-elect Haim Ramon said that if the minimum wage were raised in September, the textile, agriculture and hotel industries would collapse soon after. Instead Kadima is trying to negotiate a NIS 250 rise, arguing a NIS 500 hike might force small businesses and hotels to lay off employees in order to meet payroll demands. The Governor of the Bank of Israel, Stanley Fischer, has warned it was dangerous to raise the minimum wage excessively, as it would harm employment. He did agree, however, that increasing the minimum wage gradually, in line with economic growth or some similar index, would likely not have as detrimental an effect on employment.

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