Employment Service Tomer Appelbaum
An Employment Service office. Photo by Tomer Appelbaum
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The minimum wage will increase 12 percent to NIS 4,300 a month, according to an agreement signed yesterday by the Histadrut labor federation and the Federation of Israeli Economic Organizations.

Under the agreement, the minimum wage will be increased gradually, in two phases. The first increase will take effect in July 2011, when the minimum wage goes up 250 NIS to 4,100 NIS a month; the second phase will take effect in October 2012, when the minimum wage goes up another 200 NIS.

The agreement applies to tens of thousands of workers employed by companies that belong to the Federation's Coordinating Office. If Industry, Trade and Labor Minister Benjamin Ben-Eliezer decides to issue an expansion order, it will be extended to close to half a million other workers, particularly in sectors like food services, security and cleaning. Today, some 470,000 workers in Israel earn salaries that are equivalent to, or close to, the minimum wage.

Speaking at a joint press conference, Ofer Eini, chairman of the Histadrut, said he believes that Ben-Eliezer supports the agreement and will take steps to apply it elsewhere.

Last July, Labor MK and former Histadrut Chairman Amir Peretz tried to promote a bill to raise the minimum wage to NIS 4,600 a month but was unsuccessful.

Shraga Brosh, chairman of the Coordinating Office of the Federation of Israeli Economic Organizations, said at the press conference: "This is an important day for both employers and employees. No employer believes that it is possible to maintain a family on NIS 3,850."

Brosh, who also serves as president of the Manufacturers Association of Israel, added that for thousands of businesses in Israel, raising the minimum wage is a difficult process. For that reason, he said, it was agreed that the increase would be carried out in two phases.

The finance ministry expressed reservations about the newly signed agreement. "The government's policies and Bank of Israel decisions have brought about a steady drop in unemployment, and for this reason Israel's economy held up strongly during the world economic crisis," a ministry statement announced. "But at a time when the crisis still lingers, the decision to increase the costs of employment could harm the competitiveness of Israel's economy with the dollar and euro weakening, and could even cause an unwanted jump in unemployment."