Executive Pay for Israeli Women Lags Far Behind That of Their Male Counterparts, and the Gap Is Only Growing

Difference in annual salary at highest levels is NIS 1 million; most Israeli workers don't know pay discrimination is illegal and don't think their workplaces pay women less.

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Male executives in Israel earn on average 43% more than female executives, based on a review of the top wage-earners at companies listed on the benchmark Tel Aviv-100 index.

The Knesset Committee on the Status of Women held a session on the issue on Tuesday.

A full three-quarters of Israelis are unaware of gender-based salary gaps at their workplaces, the committee heard, based on a survey.

In fact, Israeli men earn on average 45% more than women. This situation is not unique to Israel, and some of the discrepancy can be explained by the fact that men tend to work longer hours than women.

But even after adjusting for such factors women still receive less pay on average per hour than men doing similar work, a fact that has been found by numerous studies.

The TA-100 index executive salary report was prepared by BDO Consulting Group's corporate compensation department. It was based on the 2012 salary figures for the top five wage-earners at each of the 100 companies on this index.

"We expected that women who reached such a senior position would know how to demand an appropriate salary, no less than what their male colleagues earn. In 2011 we discovered a massive 35% gap in favor of men. In 2012 the gap was 43%," said BDO partner Keren Kibovich.

A glance at the numbers shows why. While executive salaries in general declined over the past year, the drop was steeper for women - by 19%, from an average of NIS 2.7 million down to NIS 2.2 million. Men's salaries dropped only by an average of 14% since 2011, from NIS 3.6 million down to NIS 3.1 million.

This was the second year the BDO group conducted this survey.

One encouraging figure is that the number of the women on this list of the 500 top-earners increased in 2012. In 2010 and 2011 the list had just 32 women, a paltry 9%. In 2012 there were 46, or 12% of the total.

Women executives did the best in the banking sector, according to the BDO report. There, they accounted for an unusually large proportion of executives, 19%. Banking was also the only sector where female executives out-earned their male colleagues, by a full 21% to boot.

In the oil and gas exploration sector women accounted for 17% of all executives in 2012, and the salary discrepancies were a tiny 1%.

In the insurance sector, in comparison, there was not a single woman among the top earners for 2012.

Other sectors that are rough on women include manufacturing, industry and services. In these sectors, only 8% of executives are female, and their male compatriots out-earn them by a full 75%. The real estate sector is also a tough one for women -- female executives account for 13% of the total, and men out-earn them by 62%.

The biomed sector is generally considered particularly friendly for women, but BDO's figures tell a different story. There, female executives account for 18% of the total, but men out-earn them by a whopping 279%.

Parsing the figures based on position, BDO found that male CEOs out-earn female CEOs by a full 47%. This figure is based on all wage costs, not just salaries, so it incorporates various benefits.

However, female executives' salaries are often structured differently than their male counterparts'. As in 2011, in 2012 women received a much larger portion of their pay in fixed wages. Men, in comparison, received more in bonuses.

"Women tend to take less risk and to prefer definite compensation as opposed to compensation based on results," notes Kibovich. "Their compensation packages are relatively stable, conservative and secure, while men's compensation often involves uncertainty and risk, which can translate into higher pay."

In general, given such a wage structure women are paid based on their past performance, while men's earnings are based on their future potential, she said.

The survey that was presented to the Knesset committee was conducted by the Panels research institute and the Zofnat Institute for Organizational Consulting, Development, and Research as part of the Israel Women's Network project Shavot Erekh. It found that a decent proportion of Israelis were aware of gender-based salary discrepancies. More women than men reported such discrimination. Some 28% of women and 22% of men said their employer pays different hourly base rates to men and to women.

An additional 31% of women and 25% of men reported discrimination when it comes to employment terms beyond salary, and 28% of women and 26% of men reported that the criteria for determining salary are not equal.

Taken together, the survey results indicate that 24% of respondents believed their workplaces discriminated against women when it comes to pay.

A majority of respondents - 63% - were not aware of the law mandating equal pay for equal work.

Bank Leumi CEO Rakefet Russak-Aminoach, left, and her former boss, Galia Maor. Banking is the only sector in which top female executives earn more than men.Credit: Aviv Hofi

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