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Minimum wage to increase gradually to NIS 6,000 by 2025

Finance Ministry also announces steps to increase employer flexibility in public sector, encourage remote work, add extra paid vacation day

Ricky Ben-David is The Times of Israel’s Startups and Business editor and reporter.

Finance Minister Avigdor Liberman at a press conference at the Ministry of Finance offices in Jerusalem, on November 3, 2021 where the government announced that the minimum wage would rise to NIS 6,000 by 2025. (Olivier Fitoussi/Flash90)
Finance Minister Avigdor Liberman at a press conference at the Ministry of Finance offices in Jerusalem, on November 3, 2021 where the government announced that the minimum wage would rise to NIS 6,000 by 2025. (Olivier Fitoussi/Flash90)

The Israeli government is set to gradually increase the monthly minimum wage to NIS 6,000 ($1,912), or about NIS 33 ($10.5) an hour by 2025, according to a joint announcement on Wednesday by the Finance Ministry, the Bank of Israel, and major labor organizations such as the Histadrut (Israel’s national trade union) and the Manufacturers Association of Israel.

The minimum wage in Israel stands at a monthly NIS 5,300 ($1,500), or NIS 29 ($9.2) an hour. It will rise to NIS 5,400 by April 2022, and increase every year until 2025 when it will hit NIS 6,000 by December, according to the announcement.

The parties also announced steps designed to increase employer flexibility in allowing more public and private employees to work remotely in the long term where necessary, add an extra paid vacation day for public sector workers for an annual 13 days of time off, and stabilize labor processes in the public sector.

These steps will “help reduce [wage] gaps and strengthen the status of low-wage workers, promote managerial flexibility in the private and public sectors, and provide stability in labor relations in the economy,” they said in a statement Wednesday.

At the same time, the unions agreed not to allow labor strikes for a year while a number of collective bargaining deals are being hammered out.

The country is often hit by labor strikes and disputes waged by workers in various sectors that can cost the economy millions. Last month, thousands of workers in state-supervised kindergarten and daycare centers held a strike over wages and working conditions, followed by medical interns who were protesting against 26-hour shifts. In August, aviation workers held a brief strike. And last year, a nearly three-week strike by social workers ended after the Finance Ministry agreed to gradually increase wages and work to improve their often dangerous working conditions. That dispute was preceded by a nurses’ strike over manpower shortages.

Bank of Israel Governor Amir Yaron said in the statement Wednesday that the new agreements were “important news for the economy at this time. This is especially true in times when the economy is going through — and fortunately is coming out of — severe economic crisis [brought on by the pandemic]. The industrial stability that is expected to be created… both in the private sector and in the public sector, is essential in its support of the various economic processes in the economy.”

Finance Minister Avigdor Liberman said the steps “will lead the economy forward and create labor stability.”

Histadrut chairman Arnon Bar-David said the deals “will help rehabilitate the economy and improve the situation of workers” while also directly affecting “hundreds of thousands of families at low wage levels.”

Last year, 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.

Israel’s overall unemployment rate has been dipping in recent months, but remains high compared to pre-COVID-19 levels, according to figures released by the Central Bureau of Statistics (CBS).

The overall unemployment rate stood at 7.1 percent in the first half of October 2021. This figure includes people who were dismissed or whose workplaces have closed since March 2020 due to the pandemic, as well as those on unpaid leave who expect to return to their workplaces.

A total of 305,400 people were either unemployed or on unpaid leave due to COVID-19 in the first half of October, according to the CBS, down from 335,400 in the second half of September.

The unemployment rate, excluding those affected by the pandemic, stood at 5.1%, down from 5.7% in the last two weeks of September.

Before the pandemic, an estimated 150,000 Israelis, or 3.5%, were unemployed.

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