Study: Yawning Wage Gaps Point to Deep Discrimination in Israel's Labor Market

Study finds that Russian immigrants and native-born Israeli Jews earn more than Ethiopian immigrants and Israeli Arabs, by wide margins, in the same professions.

Hila Weissberg
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Hila Weissberg

The Israeli job market suffers deep discrimination based on skin color and national origin. That is the conclusion of new research examining the average wage of university-educated workers over a decade.

The study found that native-born Israeli Jews enjoy the highest average wages across nearly every profession and wage level. Immigrants from the former Soviet Union are a close second. Far behind are Ethiopian immigrants and Israeli Arabs, according to the study.

Moreover, in many cases the wage gaps widen over time rather than narrow.

According to the study, which was conducted by economists at the College of Management Academic Studies, native-born Israeli Jews and FSU immigrants enjoy wages that are 41% higher on average than those of Ethiopians and Israeli Arabs during the first year of employment in professions where average salaries are high. After 10 years in the labor market, that gap widens to 64%.

"I expected to see a wage differential of 15% or 20%. I didn't think I would find a gap of 60%. I didn't imagine that the discrimination would be so huge," said Erez Siniver, assistant dean in the college's School of Economics, who led the study together with Dalit Gafni of the College of Management and Gil Epstein of Bar-Ilan University.

Israeli Arabs on average earn NIS 14,169 after 10 years on the job in higher-paying professions, while Ethiopian immigrants earn NIS 12,116 on average, the study found.

For lower-paying jobs, the gap between the populations is 20% in the first year of employment, narrowing to 15% after 10 years. In fact, FSU immigrants receive higher salaries on average than native-born Israeli Jews - NIS 6,172 a month on average in their first year and NIS 12,211 after 10 years, versus NIS 6,026 and NIS 11,844, respectively.

"If you see a gap of 40% in wages between two people who studied similar professions, there's nothing more discriminatory than that," said Siniver. "They enter the job market at lower wages because it's hard for them to find work. They compromise on their threshold salary. We see the same phenomenon in the United States with Afro-Americans, who earn less than other population groups."

The study surveyed the average wage of 500,000 people with university degrees between the years 1995 and 2008 among four different population groups. Using data from the Central Bureau of Statistics and the Israel Tax Authority, they tracked their wage histories from the time they took their first job after graduation till a decade later.

Among the professions that were tracked were low-wage positions such as social work, psychology, education and communications as well as higher-paying ones like law, engineering, economics, business management and computers.

By focusing on wage differential between immigrants from the FSU and Ethiopia, the research confirms the theory that discrimination in the labor market is, in fact, based on skin color and national origin. That provides a fairer basis of comparison, since both groups of immigrants enter the job market with the same disadvantages of not being native Hebrew speakers and having fewer personal connections to help them.

The research found that average wages for FSU immigrants are about the same as for native-born Israelis, and 35% higher than for Ethiopian immigrants in the first year of work. Ten years later, the gap between the two groups widens to 66%. In low-paid professions the gap narrows from 21% in year one to 15% in year 10, although FSU immigrants continue to be paid more.

FSU immigrants enjoy an average pay rise in the first year of 7.26%, which brings their cumulative pay increase to 101%. Native-born Israeli Jews enjoy wage rises on average of 6.53%, or a cumulative 88% over 10 years. By comparison, the average pay increase for Israeli Arabs over the decade is 5.42% annually, or a cumulative 70%. For Ethiopians it is 5.04%, or a total of 63.5%, the research found.

It also found that the choice of profession among FSU immigrants and native-born Israeli Jews is different from the other groups. More than half (52% and 54%, respectively ) of the two groups study to enter high-paying profession while among Israeli Arabs the rate is 29% and among Ethiopian immigrants 27%.

These choices, of course, have an impact on average wages for the four population groups. The average starting wage for university-trained Ethiopians is NIS 5,421 a month in the first year of employment - 27% less than for FSU immigrants and native-born Israelis. After 10 years, the gap overall grows to 36%, according to the research.

Immigrants attending a Tel Aviv job fair.Credit: David Bachar

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