UBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd" Peretz’s populist minimum wage bill Sunday, August 22, 2010       12 Elul, 5770       create JPOST.COM your Home Page       -- -- --   Home | Headlines | Iranian Threat | Jewish World | idea | Trade | true Estate | Local Israel | Blogs | Arts & Culture | Sports | Français  | Classifieds  Israel | Middle East | International | Flotilla Backlash | Health & Sci-Tech | Features | go | Cafe Oleh | Magazine | Christian World | Services Archives JP Toolbar Christian World Youth Magazines RSS Feeds News Ticker More Services JPost Store JPost Games Israel Hotels Vacation Rentals Green Israel Car Rentals Learn Hebrew Israel Guide JPost Mall Links Rosh Hashana Cards Shana Tova E-cards Advertise on JPost Media Kit לימוד אנגלית Astrology Sitemap      Breaking News     JPost.com Opinion Editorials   .large_body p, .large_body span { font-size: 18px; } .small_body p, .small_body span { font-size: 12px; } Photo by: Ariel Jerozolimski Peretz’s populist minimum wage bill By JPOST EDITORIAL  05/25/2010 23:17 Israel educate and train its workforce. Talkbacks (8)     Previous Histadrut Chairman MK Amir Peretz (Labor), no friend of neoconservative, free-market economic theory, scored a major victory this week. He managed to convince the Ministerial Commission on Legislation to back his minimum-wage hike bill. Realizing its populist appeal, the ministers were quick to support the legislation, which would gradually raise the minimum wage over 15 months from its present level of NIS 3,850 a month to NIS 4,600.On the face of it, Peretz’s proposal sounds reasonable: all those supermarket cashiers, cleaners, and low-tech factory employees will be rewarded with an additional NIS 750 a month. The addition to their salaries will be paid by their stout-cat employers who are making loads of cash anyway.When businessmen like Shraga Brosh, president of the Manufacturers’ Organization, oppose the Peretz bill, they seem disingenuous. Does Brosh really want us to believe that factories will be constrained to either close down, fire workers or weigh outsourcing if the minimum wage is raised? Let the over-wealthy owners purchase one less sports car, one less yacht.Upon closer examination, nonetheless, while Peretz might sound like a modern-day Robin Hood, the economic reality is a bit more complex. An OECD report on Israel’s economy, presented in January, discussed our nation’s minimum wage. Not only did OECD economists not recommend raising the minimum wage, they suggested cutting it. They pointed out that at about 50% of the average salary, Israel’s minimum wage was already significantly higher than in the vast majority of OECD nations.Also, the fiscal woes of Greece, Spain, Portugal and Italy are resulting in the euro to depreciate in relation to the shekel. As a result, Israeli products have become expensive in comparison to European products. If labor costs rise, Israelis exporters will find it even tougher to compete with the Europeans.Therefore, while raising the minimum wage might make life easier for some, it really could lead to layoffs, reduced production, stalled growth and more outsourcing as businesses search for cheaper labor, precisely as Brosh has warned. Unsurprisingly, therefore, stiff Treasury opposition means the Peretz bill is unlikely to become law, at least not in its present form.STILL, WHILE raising the minimum wage might not be the reply, measures must be taken to fight Israel’s high poverty rates and the huge gaps between rich and poor. One in five Israelis lives in poverty, including many who are employed, compared to just 10% in other OECD countries on average. And the disparity between the top income earners and the lowest paid in Israel is one of the highest in the western world.An necessary step in the correct direction is a negative income tax, which has already been implemented in certain geographic areas and should be expanded nationwide as planned. By augmenting low incomes, a negative income tax encourages more individuals to join the workforce. Even so, the maximum benefit offered, which equals 5.5% of the GDP per capita or about NIS 300 a month, should be raised to the US level of 10% of GDP per capita or NIS 500 a month.In addition, the government, in cooperation with corporations and labor leaders, should reach an agreement to cap executive salaries.And before Peretz calls to raise the minimum wage, he should push for better enforcement of the existing one. In 2007, one out of seven workers was receiving less than the minimum wage and 29% of those with eight years of education or less got paid illegally low wages.  Yet perhaps the single most important step that can be taken in the long race is to invest in the education and occupational training that will prepare our workforce for more skilled labor. After all, the Jewish state’s most important resource is its human capital. Israel will never compete with low-tech industries. There will always be undeveloped countries with lower labor costs. Instead, Israel should strive to improve productivity by educating and training its workforce to perform skilled work. As that trend accelerates, productivity will rise and so will wages. As a result, fewer workers will need politicians like Amir Peretz to push for an unrealistically high minimum wage.       Rate this article       Talkback Add a Talkback Report Abuse Read all Talkbacks 8. I thought there were no longer comminusts in the w Author:   Mark State:   Israel05/27/2010   04:06It is embarrassing that a country like Israel still has people like Peretz. Give him a new pair of binoculars so he can see better -- that Israel is a capitalist country functioning on free market principles.

7. Economics 101 Author:   Matthew Berman Country:   Israel05/26/2010   23:30Minimum wage is tricky since if I have to pay somebody X amount of money, then I must receive X amount of productivity from them. On the other hand, limiting CEO salaries to Y times the lowest paid wage in the economy, or in the firm, might limit the ability of the company to acquire the most qualified CEO. However, there is evidence that CEOs have a lot of inside information about companies, and can get better pay packages by using that information, and not necessarily perform better. However minimum wage is generally a evil thought since it pushes less productive workers out of the labor force.

6. How about enforcing labor Author:   jason white Country:   israel05/26/2010   23:00laws now on the books. Also add huge financial penalties and jail time for owners and management who cheat the workers.I mean huge fines of hundreds of thousands of shekels and a three year prison sentence with no early parole or vacations.This should also include foremen and bookkeepers. When a workers sues his former company for back wages. the company if guilty should pay the legal costs for the workers and the monetary compensation should go back to the first day the worker began with that company, not the last 7 years only.

5. Yes, focus on enforcement. And a personal tale. Author:   Raymond in DC Country:   USA05/26/2010   22:23I was working in a small department story in Florida many years ago. We were watching for the impact of a rise in minimum wage.definite enough, once it went into effect some of my colleagues were let go. If the country follows the economic advice of a union hack like Peretz, it's doomed. Just focus on enforcing the existing minimum wage standards. And plod from a culture of welfare dependency to that negative income tax (a variant on the earned income tax credits in the US). Otherwise, leave the market alone. Socialism is a dead end; eventually you run out of other people's money.

4. wasn't he the "embarrassment of Lebanon 2006? Author:   jewdude Country:   usa05/26/2010   21:15wasn't this has-been with his "failure of Lebanon" non-leadership long gone from politics? Or can't he earn an honest living farming his garlic or has to embarrass eeveryone by showing up, grabbing the microphone and inserting some populist issue to cover his "NEW,IMPROVED " re-issue. I thought he was being investigated for the the IDF troops' unneeded sacrifice of their lives.

3. Amir Peretz is perilous Author:   Ken Besig Country:   Israel05/26/2010   18:26Amir Peretz has convinced a certain number of Israelis that all they have to do is hold their hand out and the government will give them money to make them successful. A lot of kids fail to graduate with bagrut because they believe that the government will always be there to support them. The only way to real success is education, a skill or profession, and hard work, not populist and ultimately irresponsible proposals like those of former Histadrut Commissar Amir Peretz.

2. Many other wages linked to minimum wage Author:   Ilan Country:   Israel05/26/2010   15:04The Histadrut has tied many other wages and benefits to the minimum wage so that a 10% increase in the minimum wage will likely lead to a 20% increase in public sector wage costs since those employees get both a wage and a benefit increase proportional to the minimum wage hike.

1. minimum wage Author:   Reuven Ben-Daniel Country:   Israel05/26/2010   12:04Set the maximum salary that the executives receive at state forty times the minimum wage in their enterprise. the Maximum salary to include all benefits, unless the workers also get their just share.

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