A new report from Tel Aviv highlights growing class inequality in Israel, and the issue is getting national attention there.
Over the past nine years, and especially in 2009, employers’ share of Israel’s national income has grown, while workers’ share has dropped, says the report, issued by the Adva Center on April 29.
“The blunt of the global financial crisis of 2008-2009 hit employees, not employers,” the social-justice-oriented Israeli research center said.
Most significantly, in 2009, the salaries of directors-general (CEOs) in companies listed on the Israeli Stock Exchange rose by approximately 9 percent, while employee wages declined by about 3 percent. The jump in CEO compensation is striking “in view of the fact that it occurred in the midst of a world financial crisis,” the report notes.
Apparently this is kicking up a fuss in Israel. On Wednesday, Knesset Finance Committee chairman Moshe Gafni said excessive salaries paid to banking and corporate executives are widening the gaps in Israeli society, the Jerusalem Post reported.
“Eli Yones, the CEO of Bank Mizrahi-Tefahot, earns NIS 1.5 million [about $403,000] a month,” Gafni said. “What planet does he live on? I’m not envious of people and their salaries. But if a whole community could be supported with a monthly salary of one person, and the cleaning staff of the same bank Yones manages earn minimum wage, it widens and deepens gaps in our society.”
“Bank Mizrahi-Tefahot is an example of how we are destroying our society with our own hands,” Gafni said. Gafni is a member of the ultra-orthodox party Degel HaTorah.
Momi Dahan, of the Hebrew University of Jerusalem’s School of Public Policy and a researcher at the Israel Democracy Institute, told the Jerusalem Post, “The Israeli experience is similar to the U.S. or the UK, where over the past three decades senior managements’ salaries have increased out of proportion to widening inequalities in the economy and society.”
A bill has been introduced in the Knesset to limit executive pay, and the government has established a commission to look into the issue. Others advocate raising tax rates on top incomes.
The Adva Center report says that between 2000 and 2009, Israel’s national income grew by 30 percent. But the employees’ portion grew by only 17 percent, while the employers’ chunk grew by 59 percent.
The shift in income from employees to employers meant that Israeli workers lost out on average by more than $3,400 a year.
In the same period, worker productivity grew while hourly pay declined, and this disparity sharpened in 2009.
Another report by the Adva Center, released April 1, documents growing class, ethnic and religious inequality and separation in Israel’s education system. Titled “Separation, Inequality and Faltering Leadership – Education in Israel,” this report links the increase in education inequality to the erosion of public financing, increasing privatization and weakening of teacher unions.
Photo: Israeli Arab and Jewish excavation workers protest against exploitation by a company that is a subcontractor for the Israeli Antiquities Authority, in Jaffa, Israel, June 16, 2009. The banners, in Arabic, Hebrew, Russian and Amhary languages, are held by workers who speak these languages. (WAC Maan, photographer Jonathan Ben Efrat http://www.flickr.com/photos/dblackadder/ / CC BY-SA 2.0)