NII: Boosting minimum wage will reduce poverty by 4%

Histadrut, Ben-Eliezer support the increase; Finance minister says Treasury will not approve increasing minimum wage; NII says huge step in war on poverty.

By RUTH EGLASH
Money 311 (photo credit: Bloomberg)
Money 311
(photo credit: Bloomberg)
Increasing the minimum wage by only NIS 450 a month per person will likely help around 75,000 individuals, including 33,000 children, escape the poverty cycle, the National Insurance Institute’s Department of Research and Planning predicted on Wednesday.
According to the institute’s research, poverty in Israel, which today affects roughly 1,774,800 Israelis, would be reduced by about 4 percent if salaries of the lowest-paid workers were increased in the coming months.
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On Sunday, the Histadrut labor federation and the Federation of Israeli Economic Organizations announced that they had agreed to raise the minimum wage from NIS 3,850 a month to NIS 4,100 in July 2011, and to NIS 4,300 in October 2012.
Industry, Trade and Labor Minister Binyamin Ben-Eliezer said he supported the move. However, Finance Minister Yuval Steinitz announced that the Treasury would not approve increasing the minimum wage.
NII director-general Esther Dominissini said that increasing the lowest salaries would not only benefit employees, but also be a huge step in the country’s battle against poverty.
Figures published last November in the NII’s Annual Poverty Report showed a sharp increase in the number of Israeli families joining the poverty cycle: More than 15,000 households, or 123,500 individuals, joined the growing ranks of poor people in this country in 2009, following the global economic crisis that set in at the end of 2008.
The report also noted that most of the families experiencing a fall in their standard of living actually had one working family member, with many having been forced to take severe pay cuts and others losing their jobs, and consequently their incomes, entirely.
On Wednesday, Welfare and Social Services Minister Isaac Herzog stressed the importance of promoting minimum wage as a means of reducing economic disparities in the economy, as well as disparities between Israel and other member countries of the Organization for Economic Cooperation and Development, which Israel joined last year.