One in Eight Israelis Paid Less Than Minimum Wage

Data shows that overall, between 10.7 and 12.2 percent of Israeli businesses violate the Minimum Wage Law.

Minimum Wage Law violations are more common in Israel than in most other Western countries, affecting 33 percent of all businesses in the agricultural sector and 22.7 percent of those in the hospitality and food services sector, a new study has found.

The study, conducted by the National Insurance Institute, is based on data from 2011. It found that overall, between 10.7 and 12.2 percent of Israeli businesses violate the Minimum Wage Law (the former figure is based on data from the NII’s survey of household expenditure, and the latter from its survey of household income).

Canada is the only Western country with a higher rate of minimum wage violations. Even Spain, which is suffering a severe economic crisis, had a lower rate of violations than Israel.

New immigrants are the group most likely to suffer minimum wage violations, followed by single people, non-Jews and women. Married, native-born Jewish men are the least likely to suffer violations.

The minimum wage is currently NIS 4,300 per month, or NIS 23.12 per hour.

The study found that aside from agriculture and hospitality and food services, violations were particularly common in two other sectors: health and welfare services (especially home caregivers) and cleaning services. All four sectors are characterized by high proportions of foreign workers and unskilled laborers.

In contrast, violations were rare in sectors such as public administration (3.4 percent), banking, insurance and investment (2.0 percent), and electricity and water. In the latter sector, the study found not one single violation.

Unsurprisingly, those who suffer the most minimum wage violations are the poor: 39 percent of workers in the lowest economic decile earn less than the minimum wage, as do 26 percent in the second decile and 21 percent in the third decile. But minimum wage violations also affected middle-class workers, including 16 percent of those in the fourth decile.

Attorney Gal Gorodeisky, who specializes in labor law, said many employers aren’t afraid to break the law because they think workers will be either too afraid or too ignorant of the law to sue them. He advocated class-action suits as the best remedy for the problem.

Nir Kafri