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Minimum wage hikes in Israel benefit men more than women, think tank says

Salary increases for lowest wage earners contributed to gender gap in employment, with more women losing work, according to new study

Luke Tress is a video journalist and tech reporter for the Times of Israel

An Israeli woman outside a distribution center for needy people in Lod, September 11, 2012. Yonatan Sindel/Flash90)
An Israeli woman outside a distribution center for needy people in Lod, September 11, 2012. Yonatan Sindel/Flash90)

Minimum wage increases in Israel have benefited men more than women and widened the gender gap in the labor market, an Israeli think tank said in a new study.

The pay hikes have led to higher salaries overall, but affected men and women differently, according to the Shoresh Institution for Socioeconomic Research.

Wage increases tended to increase job retention for minimum wage-earning men, but decreased job retention for women, compared to a control group that earned slightly more than the minimum.

Job retention fell for women by up to 18.4%, relative to the control group, but for men, it increased by up to 13.8%.

Men tended to move into and out of jobs less following minimum wage increases, meaning fewer men stopped working, but fewer also found employment, possibly because there were fewer vacancies in the workforce. Wage hikes did not significantly increase women’s chances of finding work.

In short, men were more likely to keep their jobs, while women were more likely to lose them, and neither group was more likely to enter the workforce.

“The fact that men at the lowest wage levels were more likely to remain employed indicates that their employers did not rush to dismiss them,” the authors said. “The fact that women at the same wage levels became less likely to remain employed after the minimum wage hike suggests termination of employment at the employers’ initiative.”

Part of the gender disparity could be due to the fact that men and women at the lower salary range are employed in different economic sectors. More minimum wage-earning women are also part-time workers, who are more likely to be fired, the authors said.

Men and women who made minimum wage saw salary increases of between 0.5%-2.3% annually, compared to people making more than minimum wage.

The independent policy research center studied the gradual increase in Israel’s minimum wage from 2006-2009, and how the hikes impacted lower-wage workers, to come up with the findings.

Israel’s minimum wage, relative to its median full-time wage, was higher than all other OECD countries besides France and Australia over the past two decades.

The minimum salary also successfully raised families above the poverty line, but has been less effective in recent years, especially for larger families. Starting in 2012, a couple with three children earning minimum wage fell below the poverty line, including with child benefits.

Israel’s minimum wage is currently NIS 5,300 ($1,650) per month, or around NIS 29 ($9) per hour. The last increase was in April 2018.

The study did not reflect the workforce upheaval caused by the pandemic. Unemployment skyrocketed last year as COVID-19 took hold in Israel, and has remained relatively high since.

Government ministers reportedly considered lowering the minimum wage during the pandemic to encourage employers to hire more people in an effort to counter rampant unemployment, but did not go through with the move.

The Shoresh study was led by Brit Levanon, Ayal Kimhi and Dan Ben-David using data from the Central Bureau of Statistics.

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