Report: Israeli Banks Paying Fat Salaries to More Staff Even as Overall Payrolls Declined

Number of workers earning one million shekels or more grew 18 percent in 2018, Israel central bank says

Israel's central bank chief Amir Yaron.
Steven Scheer / Reuters

Israel’s banks have been cutting payrolls, aggregate wage bills, and other expenses, but the number of highly paid employees climbed sharply last year, the Bank of Israel said on Monday.

The number of employees in the banking system earning a salary of more than 1 million shekels ($280,000 at current exchange rates) grew 18% last year, the central bank said in releasing its annual report on the sector. The number earning 600,000 to 1 million shekels grew 6.9%.

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The increases came even though the collective wage bill for the Israeli banking system was down 2.3% to 16.4 billion shekels. About 1,000 jobs were shed, or 1.5%, to a total to 40,245. That was down 15% from a 2011 peak.

The central bank attributed the decline in the number of jobs to a drop in lower paying positions of up to 360,000 shekels a year, and the number of bank employees working abroad.

“This was offset partly by a rise in the number of medium-to-high paying jobs of more than 360,000 shekels annually – a trend that reflects a change in the makeup of the bank labor force, with more high-tech workers being recruited, who generally get higher salaries,” the report said.

The Bank of Israel has been offering incentives to the country’s banks to bring down their traditionally high labor costs and cut other expenses in the hopes this will reduce costs to consumers.

It is also coaxing the bank into using more technology and creating new competition, most notably in the order to the biggest of them to sell their credit card units, in the hopes they will compete with the banks to provide consumer credit.

However, a plan to clear the way for Israel’s first digital bank promised a year ago has yet to happen, even though a group led by tech entrepreneur Marius Nacht was in talks with regulators about establishing one.

“We are taking important step on the matter and making progress with a relevant group. I’m optimistic,” said Banks Supervisor Hedva Ber, apparently referring to the Nacht group. “Nevertheless, you need two to tango and it takes time. I hope we can do it in the near future.”