The average monthly salary for Israeli employees has fallen in recent months to NIS 11,753 ($3,514) in May, down from 12,026 ($3,596) in April and NIS 12,668 ($3,788) in March, according to new figures released Thursday by the Central Bureau of Statistics (CBS).
Israel has been on a path of recovery since 2020 when the COVID-19 pandemic hit, showing strong growth in 2021 and moderate expected growth for 2022 amid rising inflation, housing prices and consumer costs, and another looming national election.
The country’s unemployment rates reached their pre-pandemic levels in recent months, according to assessments by the Bank of Israel, but the economic atmosphere is complicated by a shortage of workers, specifically in the tech sector amid a general slowdown in the industry.
But salaries in the tech industry are still at the top of the pay scale, with average monthly salaries of NIS 26,828 ($8,019) in May 2022 — down slightly from NIS 27,684 ($8,275) in April 2022, but higher than the NIS 24,826 ($7,421) in May 2021. The industry employs 383,000 people, an increase of 11.8% compared with May 2021, according to CBS. Salaried tech employees account for about 10% of the Israeli workforce.
Tech workers in R&D roles make monthly average salaries of some NIS 30,000 ($8,967) at the high end, while on the lower end, employees in tech communications and marketing can bring in about NIS 15,000 ($4,483), the figures showed.
Salaried employees in the finance and insurance sectors make monthly average salaries of NIS 23,000 ($6,875), followed by workers in the electricity and water provision and sewage services sectors, who saw average wages fall slightly to NIS 19,545 ($5,842) in May 2022 (down from NIS 20,530, or $6,528 in December 2021). The latter employs over 30,000 people in a sector that includes market monopolies.
At the bottom of the pay scale, the average salary for hospitality workers was NIS 5,720 ($1,709) per month. The minimum wage in Israel stands at a monthly NIS 5,300 ($1,500), or NIS 29 ($9.20) an hour, likely indicating that many hospitality workers may not be employed full time.
The government announced late last year that it would gradually increase the monthly minimum wage to NIS 6,000 ($1,912), or about NIS 33 ($10.50) an hour by 2025.
According to CBS, there were 3.941 million salaried employees in Israel in May 2022, up 10.1% from May 2021 with 3.58 million and 1.1% from April 2022 with 3.89 million salaried workers.
A July report by CBS noted that there were over 152,000 job vacancies in June 2022, mostly in the sales and services sector, with over 17,000 open positions in tech for programmers and computer engineers.
Strong economy, rising inflation
Last month, the Bank of Israel raised its benchmark interest rate by half a point to 1.25 percent, ramping up its fight to tame rampant inflation and spiraling housing costs.
The move sent adjustable-rate mortgage payments further up, on top of already-high housing prices that rose by about 15% over the past year, in the biggest rise in over a decade.
In February, the central bank indicated that it would start gradually increasing the interest rate to temper inflation, citing Israel’s strong economic performance and indications pointing to “continued strong activity” alongside a spiraling energy crisis sparked by Russia’s war on Ukraine and a slowdown in economic activity in China due to an increase in COVID-19 morbidity and the disruption to the global production chain.
The higher rates are designed to restrict the flow of money by making borrowing less attractive, eventually dampening consumer demand, and easing inflationary pressures wrought by an undersupply of goods and an oversupply of cash.
According to the central bank, inflation in Israel over the last 12 months reached 4.1% with estimates showing it rising to 4.5% for 2022, before dropping down to 2.4% next year. These figures are higher than the upper ranges of 3% for 2022 and 2% in 2023, estimated by the bank in January.
The bank forecasted that GDP will grow at a rate of 5% in 2022 and 3.5% in 2023, lower than its February projections for 5.5% for 2022 and 5% for 2023. Israel saw staggering growth of 8.1% in 2021, the highest since 2000, when Israel’s growth rate stood at 8.4%.
Although the estimated growth rate for 2022 was “slightly lower” than expected, Bank of Israel chief Amir Yaron said it was “definitely growth that reflects a strong level of economic activity.”
The Israeli economy, said the bank chief, “is in a strong position in many respects. Growth is high, the labor market is tight, the government deficit is low, tax revenues are rising, and businesses continue to report an improvement.”
On a less positive note, another national vote — slated for November 1 — presented “an environment of political uncertainty” that was “not good for the economy,” he said.
An Israel Democracy Institute study in June estimated that the cost to the economy of the next election will be up to nearly NIS 3 billion ($873 million).