The distribution of salaries in Israel between employees and executive was stable in 2006-07, with employees earning 62% of total national income and employers earning 13%, according to Adva Center Labor Report: 2007 by Dr. Shlomo Swirski and Etty Konor-Attias. However, on the basis of the salary cost of executives of Tel Aviv Stock Exchange (TASE) listed companies published by "Globes", Adva states that the average executive salary cost rose by 45% in 2003-07, while employees' salaries rose by just 0.8%.
Adva notes that Bank of Israel reports on the economy state that the primary beneficiaries of Israel's economic growth in recent years has been executives. Adva says that the salary distribution has been become more unequal since 2000, when employees earned 68% of national income and employers earned 10%. In general, employees' share of the national income has declined over the past two decades.
Adva adds that, in 2007, 18% of the national income came from net taxes on domestic production and 5% came from passive income on rent and foreign income.
Adva says that had employees' 2007 share of the national income been the same as in 2003, at 66%, the addition to the average national salary would have been NIS 8,017 per year or about NIS 670 per month.
On the other hand, Adva notes that it can be argued that the increase in employers' share of the national income led to the improvement in the economy, the drop in unemployment, and job creation. The Bank of Israel attributes the decline in employers' share of the national income to the weakening of the Histadrut (General Federation of Labor in Israel) compared with previous decades; globalization, which has put pressure on labor costs; and the switch to capital intensive industries.
Published by Globes [online], Israel business news - www.globes-online.com - on April 29, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008