'Wage gap soars despite economic boom'

Report shows workers' slice of the pay pie remains steady while their employers see rising profits.

ConstructionWorkers224.8 (photo credit: Courtesy)
(photo credit: Courtesy)
The disparity in income between employer and employee has grown steadily over the past decade, with those in managerial positions enjoying far more significant raises in pay than their subordinates, according to a new report released by the Adva Center for Equality and Social Justice on Tuesday, ahead of May Day. According to the report, the relative share of employers and employees in the national income has remained steady over the past two years. However, since 2000, when employers comprised 10 percent of the national income and employees earned 68 percent, the gap has grown. In the past two years, those in managerial positions have been earning 13 percent of Israelis' income while those working under them have been taking home a meager 62 percent. Had the employees' slice of the pie been 66 percent in 2007, they would have earned an additional NIS 23.2 billion as a group, the report said, adding that this would have meant an annual NIS 8,000 raise for every worker. Taking inflation into account, the average pay for an hour's work rose only twenty agorot between 2003 and 2006, from NIS 42.7 to NIS 42.9, the report said. Meanwhile, the average annual salary cost for a senior manager in a brokerage firm in the corresponding period increased from NIS 1.61 million to NIS 2.17 million. The report quoted from the Bank of Israel annual report for 2007: "A moderate increase… in wages during a period of growth is a phenomenon that is hard to explain." According to Dr. Shlomo Svirski, the author of the report, "The fruits of [economic] growth are unevenly distributed. On the one hand we see a rise in the profitability of the employers' asset groups. Conversely, we are seeing only a relatively small increase in the average wage."