Steinitz Wilts on Raises, Minimum Wage

Minister succumbs to pressure from union chief and PM, agrees to 7.5% increase.

Finance Minister Yuval Steinitz has folded under pressure from Prime Minister Benjamin Netanyahu and labor leaders and has agreed to increase the minimum wage for all public-service workers, even those who effectively receive more than the minimum wage. He also agreed to increase the blanket raise for public-sector workers.

The ministry has thus backtracked on its opposition to raising the "minimum wage" component in the salaries of those workers who, in practice, earn more through an assortment of extras (such as overtime and clothing allowances ) that are not calculated into the "minimum wage."

Finance Minister Yuval Steinitz
Emil Salman

Only 5% of those public-sector workers listed as earning the minimum wage, in fact, do.

The minimum wage is NIS 3,850 a month. But Histadrut labor federation chairman Ofer Eini's position is that even workers grossing NIS 8,000 or more a month should get the increase if their base pay (not including all those extras ) is the minimum wage.

Sources at the treasury said Netanyahu had wielded pressure on them to back down. "Steinitz folded all along the line, but especially on the issue of increasing the minimum wage," said a top treasury official yesterday."It's embarrassing that thousands of workers who earn much more than the minimum wage by virtue of various extras will get undeserved raises that were supposed to be earmarked for the weakest workers. But Netanyahu pressed. What could we do?"

Meanwhile, the Histadrut has struck an agreement with employers' representative Shraga Brosh, chairman of the Federation of Israeli Economic Organizations, to increase the minimum wage in two phases.

In July, the minimum wage will go up by NIS 250 to NIS 4,100, and in October 2012, it will increase by another NIS 200 to NIS 4,300.

Blanket raise for all

Steinitz also agreed in secret talks held with Eini and Netanyahu that public-sector workers would get a 7.25% raise, not the 6.25% agreed on just a few months back, in November. The treasury won one battle: The raise will be paid in four phases, not three, as stipulated in the November agreement.

According to the agreement struck in November, the roughly 800,000 public-sector workers, employed at ministries, local authorities, government companies and and other public institutions, would get the first part of the raise, 2.25%, in January. The second part, 2%, would be paid in January 2012 and the third in January 2013.

Under the new understanding, the second payment has been reduced to 1.75% (from 2% ) in January 2012, the third has been increased to 2.25%, payable in January 2013. A fourth installment of 1% will be paid in July 2013.

The rest of the agreement reached in November remains unchanged, including NIS 2,000 bonuses to all workers, raises of NIS 300-NIS 500 for women with children up to age 5, and sweeter terms for sick leave.

The bottom line is that the two agreements - raising the minimum wage and the blanket raise - will increase salaries for the lowest-paid workers by about 20%, providing them with seven pay raises in the space of two years. The labor federation is now expected to cancel the labor dispute it had declared and withdraw its threat to shut down the public sector.

Treasury and Histadrut officials have still not reached an understanding on pay increases for social workers, who could go on strike as early as Sunday. Welfare Minister Moshe Kahlon intends to meet with Steinitz today and over the weekend, hoping to avert the strike at the last minute.