Knesset Unites to Raise Minimum Wage After Attorney General Orders Delay

Moves comes after AG rules gov't can't extend increase to public sector until after election.

Olivier Fittousi

In a rare pre-election show of unity, coalition and opposition lawmakers quickly lined up on Thursday behind a plan to introduce fast-track legislation raising the minimum wage in both the public and private sectors.

The move came shortly after Attorney General Yehuda Weinstein ruled against the government’s plan to extend the increase, which had been negotiated between the Histadrut labor federation and private sector employers, to the public sector as well,

Weinstein said the hike, which was supposed to be implemented via a government directive and set the minimum wage at 5,000 shekels ($1,274) by 2017, could not be done before the general election March 17. Prime Minister Benjamin Netanyahu had announced the initiative at Sunday’s cabinet meeting, and Economy Minster Naftali Bennett was due to issue the directive before Weinstein blocked it.

The drive to ensure the minimum wage hike is cleared to go through on time as cost-of-living and other economic issues have emerged as a key issue in the election.

Netanyahu has also proposed eliminating the value-added tax on basic foods as he faces competition for votes from Moshe Kahlon’s newly formed Kulanu party and former finance minister Yair Lapid’s Yesh Atid Party, which is putting cost-of-living issues at the forefront of its campaign.

Weinstein’s order, however, would have effectively delayed putting into effect the private sector minimum wage pact as well. Under the terms negotiated between unions and employers, the first tranche of the wage hike was supposed to occur in April.

But the agreement was conditioned on the minimum wage being extended to the public sector. Under Weinstein’s ruling, only after the next government is formed can a directive be issued and, given the time it is likely to take for negotiations to reach a coalition agreement, that might not happen until May or June.

However, late Thursday Netanyahu, together with opposition leader MK Yitzhak Herzog and Histadrut chairman Avi Nissenkorn, agreed to bring legislation to the Knesset that would circumvent Weinstein’s ruling by amending the existing Minimum Wage Law to meet the terms negotiated by the Histadrut and employers.

Netanyahu, who has been serving as acting finance minister since he forced Lapid out of the coalition, ordered the treasury to come to terms with the Histadrut over the private sector wage increase so it could be applied to the public sector, too, and put into legislation.

Treasury officials had opposed the terms of the minimum wage increase that private sector employers had negotiated with unions and hoped to reach their own agreement.

The agreement reached December 3 calls for the minimum wage to rise from the current 4,300 shekels to 5,000 shekels in three tranches – April 1, 2015, August 1, 2016 and January 1, 2017. What the treasury in particular opposed is a clause that would have gone into effect in April 2017 setting the minimum wage at 52% of the average wage, up from the current 47.5%.

Weinstein said he was not opposed to the increase in the minimum wage to 5,000 shekels, but to the 52% clause, which has yet to be agreed on by the treasury.

“When we are speaking about a matter of amending the Minimum Wage Law, which will have long-term implications evident only years from now, I don’t see how discussions can be held and decisions made in the midst of an election,” Weinstein said.