Treasury says 21% of public sector pays 'excessive' wages

Wage excesses are defined as a situation in which a public sector salary rose from 2004 to 2005 by more than 5% above the wage hike for a comparable gov't employee.

March 27, 2007 07:35
2 minute read.
iec electric pole 88 298

iec electric pole 88 298. (photo credit: Ariel Jerozolimski)


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The number of government institutions deviating from salary limits in 2005 rose to 138 from 104 in the previous year, accounting for 21% of the 672 government companies, organizations and entities, the Finance Ministry's annual wage survey disclosed Monday. "For the first time since the launch of the wage supervision unit, the wage division will appoint investigators to identify and impose sanctions on those sources that allowed wages in excess of the public sector wage law," the report stated. Wage excesses are defined as a situation in which a public sector salary rose from 2004 to 2005 by more than 5% above the wage hike for a comparable government employee. Since 1999, these public sector excesses had fallen steadily from 62% of government bodies to about 16% in 2004, saving the government over NIS 2.5 billion, before rising again to about 21% in 2005, according to the report. The Finance Minister's Director of Wages, Eli Cohen, supervises 300,000 public sector employees placed in 700 government entities. Local authorities and municipalities showed the sharpest increase in wage abuse in 2005 over 2004, representing 81 out of the total 138 government bodies, compared with 58 out of 104 previously. The report also revealed salary deviations of thousands of workers at the Israel Electric Company, which are expected to save the company over half a billion shekels, following the salary cuts demanded by the Director of Wages, and including NIS 100m. from an agreement reached to reduce the salaries of 60 senior staff. The Director of Wages is also demanding that four senior staff member at the Ashdod Port Company return NIS 1.7m identified as illegal salary rewards received until 2006. As a result, the company is expected to have annual savings of NIS 635,000. At the Bank of Israel, which has come under fire for overblown salaries, the report revealed 34 cases of salary deviations in 2005. For example, the monthly salary granted to a finance manager was raised from NIS 56,221 in 2004 to NIS 105,428 in 2005, while a programmer was paid NIS 89,426 in 2005 up from NIS 47,441 in 2004. In response to the report, the Bank of Israel said that the annual wage report was again misleading the public. "In the majority of the cases, the rewards were one-off payments, which do not represent the real picture. In very few cases, employees were also promoted to a higher rank, which is a legitimate procedure in the public sector," the central bank said.

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