Monthly minimum wage set to increase Wednesday

The monthly minimum wage will be raised by NIS 300 ($75) Wednesday following a pre-election decision to raise the current NIS 4,200 ($1,600) monthly sum doled out to 600,000 workers across Israel.

The Histadrut Labor Union and business groups agreed to raise private sector minimum wages to NIS 4,650 starting April 1. The minimum salary will again be raised by NIS 175 within 18 months, and a year later by another NIS 175, reaching NIS 5,000 ($1,260) by December 2017.

The decision was made by the outgoing Knesset. It is unlikely however, that the new finance minister, Moshe Kahlon, who entered the Knesset on a social agenda, will interfere with the three-stage process, according to Channel 2.

Avi Nissenkorn, chairman of the Histadrut, praised the move as a boon for workers, as well as for overall productivity.

“This is a historic moment for Israel’s economy and society. It’s a move aimed at raising productivity in Israel — which is 23 percent lower than the OECD average, and there is a significant correlation between the level of productivity and the level of wages. Indeed, wages in Israel are also 25% lower than the OECD average,” Nissenkorn said Monday, according to the Globes business daily.

“We are now changing the lives of 700,000 families across Israel. This is a social change and change to the poverty index,” he said.

Despite this, firms and organizations are worried that they will start feeling the wage increase on their own pockets — the spike is expected to cost employers NIS 9 billion ($2.27 billion) a year when the new salaries come into effect, Globes reported, citing an unnamed source.

A further proposal to raise minimum wage to NIS 5,400 ($1,360) by January 2018 was being mulled by Labor Union and Finance Ministry officials.