Next week, Israel’s monthly minimum wage will be revised upward, increasing by 6% to NIS 6,248, which is NIS 367, compared to the current minimum wage. A similar rise was also recorded in April 2024.
In welcoming the Minister of Labor, Joab Ben Tor stressed that “the rise in the minimum wage is good news for hundreds of thousands of workers in the economy.” However, this movement is also dangerous. First and foremost, there is a high correlation between wage increases, price increases and inflation. Companies can take over the increase in workers’ wages to consumers, making their products more expensive for everyone.
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Bank Leumi Market Head Strategy Kobby Levi said the main impact of the sector, “retail companies, food services and health services,” which has a high proportion of minimum wage workers, will be reflected as expected. Already, current job market data shows an economy in full employment status, with an unemployment rate of 2.7%. Vacancy rates continue to be high due to historical standards, indicating a high employee need. The average salary wage at the end of 2024 was NIS 13,514, an increase of 5.1% from 2023.
Ofer Klein, director of research at Harel Insurance and Finance, believes wages are primarily on a positive rise. He said, “This is a move aimed at reducing inequality. When the minimum wage in the economy increases, it is very positive. Furthermore, an increase in the minimum wage increases motivation to go to work. The state has a clear interest in this.
Another advantage is reflected in personal consumption. Employees who earn minimum wages have traditionally tended to spend most of their income on private consumption, so the relative increase in disposable income allows for additional spending on consumption. However, Klein notes that wage increases can also harm local industries. “Products imported from overseas have become more attractive to the manufacturing industry, and the competitiveness of local people is undermining it.”
Published by Globes, Israel Business News – En.globes.co.il – March 27, 2025.
©Copyright of Globals Publisher Itonut (1983) Ltd., 2025.
