Wednesday, 12 November 2014

Minimum Wage in Israel - You Can Make It Here (But How?!) - Radio Interview Included

Questions and discussions addressed in this post include:

1. What is the minimum wage in Israel?
2. What does minimum wage mean for the average worker?
3. What will my financial situation be if I end up earning only minimum wage?
4. Realistically - will minimum wage - without any additional financial assistance from family / friends give me the freedom to be able to purchase my own apartment (ever?)
4. If I am too old for the main work force or if I lack skills will that mean I am stuck with minimum wage forever?

Minimum Wage: It's not the type of expression anyone wants to hear on a regular basis - especially when it has to with yourself personally! Somehow, it doesn't have a good sound to it. This article addresses the topic as seen by the average person. While the article explores the reality of what minimum wage means to you - a regular worker in Israel - it must clearly be pointed out that even with little skills, there are other avenues to earning an income in Israel - and these should indeed be explored with every effort possible.

There was once a headline in a top American newspaper which stated "Minimum Wage $0.00". Not everybody got the message. Economists pointed out that this was what the government needed to implement in order to bring some stability to the economy - to give more people the opportunity to work. They indicated that when the government institute a wage which must be paid as a minimum amount to all employees, that those who could not perform basic job work would not be employed because nobody would be prepared to pay them the minimum wage! As a result, these people - often older teenagers and those in their early twenties, would end up on the streets, committing crime and in general being a trouble for society.

Though such individuals may wish to work, even for less, Government would not allow the employer to employ them because by law the employer will be forced to pay more - which they are not prepared to do based upon the skills these young people have. But think about the "other side of the coin"... While it may be true that without a minimum wage, everyone could theoretically get work - it could also be true, that employers would be permitted by law to have a worker work for them at absolutely no cost to the employer!!! People - especially in desperate times - find themselves prepared to work for anything - a meal, a dollar, 20 cents - anything. (A general look at Internet sites offering "job opportunities" including Content Writing and other "If you can do it, we will employ you" work opportunities, show clearly how the average person is prepared to exploit the worker to an almost slave level of work - all for their own profit. Payment is also often not given, though work is done, leaving the worker feeling totally despondent and desperate, and prepared to now do even more, for even less!)

Those who do in fact work for minimum wage well know the many frustrations encountered. Are employers ever really prepared to pay more for those who lack the skills for highly specialist work? Once the employer is given a license to pay a worker "x" amount - does he ever have to pay him more? The answer is a resounding "NO!" It is also unlikely that the worker will ever get more. He can end up working in the same company for years on end - inflation always on the increase - with his being stuck at the minimum wage he began with ten years earlier!

This brings us to our topic. Currently, the minimum wage in Israel sits at about 23 Shekel per hour. For some reason the economists wish to express it as a dollar figure - $6 - even though this is Israel which works in Shekels. In Israel, a work week is 6 days. The week is a long one for those forced into working this entire time - for at least 8-9 hours (more likely the latter) every day. While they have no choice, such a lifestyle makes huge demands on one's health - and just taking a look at the news, it seems that most cannot cope!

As of today - the bottom line is that a full month of full time work will earn you just ₪4300 a month. It's impossible to explain to those earning the "average" salary of ₪9000 the impossibility to actually live properly. Incidentally, the "average" amount is simply a figure which only actually exists as average based upon the literal average amount between all income earners - and not the actual amount earned!) The average earner in Israel is not in fact earning ₪9000. The average earner is stuck earning minimum wage - and hence the reason why this topic is constantly in the media (and makes no sense to high income earners as being a problem for anyone!)

The good news (at least that's how I felt hearing it at first) is that Government do in fact realise that the minimum wage is below a minimum living amount. It's taken many years for them to see this. Sadly - as the radio interview (below) will make it clear - Government is  looking into increasing the amount by just ₪200 per month. I did not do the mathematics, but it translates to something at about just ₪1 more per hour of labour. While people may be ecstatic to hear the "good news" and how many weeks and months are being invested in terms of implementing this new (revolutionary?) law - it is sad to see the lack of regard for being able to live life in at least in a respectable manner.

I point out again, that in today's times - even if you purchase a home in a settlement area (far away from your workplace and a place you may feel uncomfortable in and not best suited for you) you may still be paying some ₪500 000 at least for a very small apartment. (See Yad 2 under the Nadlan section for a realistic view on the cost of housing in Israel.) While banks need at least 30-40% down-payment for a home (usually the latter) you would still need to save up some ₪200 000 in order to purchase a home to live in. 

A small calculation of your minimum wage earning will tell you that it would take you at least 4 years of earning without eating, drinking, travelling, speaking on a phone, buying clothes or paying for anything medically related - to save up. Of course it's not realistic, because there are still taxes of a variety of kinds on your actual income (Bituach Leumi - for example) which reduces your gross amount even further. Realistically - it would probably take some 15-20 years of full time work before being able to earn enough for a down-payment on that very small home in a settlement - if you are starting from scratch - like many in fact do. Realistically - it may in fact take longer - and may not even be possible at all - even for the "settlement apartment." Unfortunately in 15 years time, the home will have gone up at least 100% in price - leaving you exactly where you started! Those earning bigger incomes in Israel once again neglect to see the impossibility of this painful situation often offering "helpful" advice such as eating potatoes every day as your main meal - three times a day, and other often ridiculous alternatives that can apparently save one thousands of shekels a month(!) which can be used to save up for one's dream home.

If you're living in Israel or planning to live here, consider the reality of your financial situation. If you are still young (read: 20-30 years old) with decent skills that are needed - you may indeed stand a chance of being able to actually settle here with a job that pays a livable income. Keep in mind that past the age of around 40 - without the high skills and experience that are needed - it is extremely highly unlikely to obtain any work more than a minimum wage job (if lucky!) - in terms of the regular market. As a result - your quality of life just in terms of finance, must be assessed realistically.

I present a radio interview from TLV1 radio (which presents some great shows on a variety of subjects, including understanding the Israeli economy in a much clearer light). The link can be found at: Israel's Minimum Wage Has to Come Up... But By How Much? The interview is about the new law concerning the increase in Minimum Wage and it is highly recommended listening!

The REALLY Good News!!!

If you feel that a minimum wage job is the only recourse you have in terms of earning an income in Israel but would like to approach earning income generation - for your personal lifestyle - from another angle, feel free to be in touch with us directly. We will help to give you a realistic look on how you CAN make it in Israel - even if you cannot manage on your minimum wage job!

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