Report: Israel's Rich Grew Richer Over Last Decade

Adva Center says employers' share of national income grew almost four times that of workers.

Israel's national income grew by more than a third in the decade to 2011, but most of the increase went to employers rather than wage earners, according to a report by the Adva Center policy analysis institute.

Salaried employees saw their combined income grow just 23% in the period, while employers' income jumped 85%, according to the study by researchers Shlomo Swirski and Etty Konor-Attias. As a result, wage earners' share of total national income declined in 2011 to 63% of the total, down six percentage points than a decade earlier. The employers' share, however, climbed to 13%, from 8-9% in 2001.

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"Even if we are talking about fluctuations of single percentage points, in practice these are quite significant amounts," Swirski and Konor-Attias said in the report.

National income in 2011, for instance, came to NIS 735 billion. If the workers' share of that had remained unchanged from its 2001 level, they would have had an extra NIS 44.1 billion. That works out to an extra NIS 1,147 per worker, if the total is divided into the number of people in the labor force (not counting foreign workers ).

By other measures, 2011 was a good year for Israeli labor. The number of new jobs grew by 80,000, most of them full-time positions. At an annual average of 6.5%, the unemployment rate remained low by the standards of countries belonging to the Organization for Economic Cooperation and Development, even after the government revised the figure upward after adopting new benchmarks.

Among wage earners and the self-employed, there was also a division, Swirski and Konor-Attias found. Using data from the government's State Revenue Division, they found that the highest 1% took 14.1% of national income in 2010 - an increase of 34% over the previous five years. That places Israel alongside the United States, Argentina and Britain, where the wealthiest also enjoy such a large share.

The biggest portion of the top percentile's share of national income derived from the compensation paid to senior executives, the researchers said. The chief executives of the companies listed on Tel Aviv Stock Exchange's TA 25 index earned on average NIS 9.8 million each in 2011 - NIS 3 million in salary, NIS 2.8 million in bonuses and NIS 4.2 million based on share performance.

"The figures testify to the weakening bargaining power for the majority of Israeli wage earners," the report said. "The low level of earnings today are likely to emerge as future losses as workers struggle to maintain a reasonable standard of living, while providing for themselves and their children the training and education that ensures a strong foundation for long-term economic growth."

The OECD has found that economic inequality grew in most member countries, but mostly in Israel and the U.S. The Paris-based organization, which includes many of the world's leading economies, said that average income for the top decile in most of the developed world was nine times faster than for the bottom decile over the past decade, while in Israel - as well as the U.S. and Turkey - the gap was 14-fold.

Israel and Japan were the only two OECD countries to see income for the bottom decile decline from the 1980s until the end of the first decade of the 2000s. The income of the highest decile grew an average of 2.4% annually in that period, compared with 1.7% for the entire population.