After 37 years, new package deal to improve Israeli work conditions

'For the first time in 37 years, we are today signing a package deal - which is great news for the Israeli economy,' said Finance Minister Avigdor Liberman.

 Liberman presents the budget for 2021-2022 at a Knesset meeting on Thursday, September 2, 2021. (photo credit: MARC ISRAEL SELLEM)
Liberman presents the budget for 2021-2022 at a Knesset meeting on Thursday, September 2, 2021.
(photo credit: MARC ISRAEL SELLEM)

The new package deal reached Wednesday between the Finance Ministry, Bank of Israel, Histadrut labor federation and other organizations will raise the minimum wage to NIS 6,000 per month over five years, and increase the minimum number of vacation days to 13 from 12 beginning next year.

The deal, the first of its type in Israel in 37 years, will help reduce social gaps and strengthen the status of low-wage workers, promote managerial flexibility in the private and public sector, and provide certainty in labor relations in the economy, the ministry said.

“For the first time in 37 years, we are today signing a package deal – which is great news for the Israeli economy,” said Finance Minister Avigdor Liberman. “The package was essential for the recovery of the economy, and the contribution to the economy is significant.”

 INTERIOR MINISTER Ayelet Shaked, Finance Minister Avigdor Liberman and Construction and Housing Minister,  Ministerial Liaison to the Knesset, Jerusalem Affairs and Heritage Minister Ze'ev Elkin at a meeting discussing the Economic Arrangements Law, October 31, 2021 (credit: MARC ISRAEL SELLEM/THE JERUSALEM POST) INTERIOR MINISTER Ayelet Shaked, Finance Minister Avigdor Liberman and Construction and Housing Minister, Ministerial Liaison to the Knesset, Jerusalem Affairs and Heritage Minister Ze'ev Elkin at a meeting discussing the Economic Arrangements Law, October 31, 2021 (credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)

According to the deal, the minimum wage will be raised from NIS 5,300 a month now to NIS 6,000 by 2026, increasing by NIS 700 gradually over the course of five years. The first increase of NIS 100 is expected next April.

Employees would be entitled to a minimum of 13 vacation days per year, instead of the current minimum of 12. And the number of weekly work hours will not be cut.

In addition, all public-sector workers will be allowed to work from home one day a week, as long as their job requirements allow for it.

The parties also agreed on changing overtime calculations from a daily to a monthly basis, as is customary in most OECD countries. The change will allow employees and employers to manage work hours more efficiently and tailor them to both of their needs, giving employees the ability to balance work hours with leisure time, the ministry said.

“This is certainly important news for the economy at this time, for a number of reasons,” said Bank of Israel Governor Prof. Amir Yaron. “The main reason, in my opinion, is the certainty that the package deal creates for economic activity, in addition to its being graduated and proportional.

“This is particularly the case at this time, when the economy is getting over, and thankfully exiting from, such a serious economic crisis,” he said, adding that it “comes at the same time as the expected passage of the state budget and the important structural reforms that accompany it for sustainable growth in Israel.”

“The package deal is an important moment in labor relations in Israel, which will help rehabilitate the economy and help improve the situation of workers,” Histadrut chairman Arnon Bar-David said. “A gradual increase in the minimum wage to NIS 6,000 will directly affect hundreds of thousands of families at low wage levels and will push the entire wage level upward.

“Without wage cuts, without harming the pension system and with an innovative model of remote work and regulation of a dedicated budget to promote weakened sectors, we will ensure the recovery of the economy and ensure that all workers enjoy the fruits of growth.”