The median gross salary of Israelis was NIS 6,655 in August 2012, compared with the average national gross salary of NIS 9,000, says Prof. Eran Yashiv, the Public Policy Department at Tel Aviv University, in a study.
On Tuesday, the Central Bureau of Statistics reported that the average national gross salary of Israeli employees was NIS 8,994 in August. Some "Globes" readers asked what was the median salary, on the grounds that the average national salary was not representative. The Central Bureau of Statistics said that it did not calculate the median salary.
The median figure is a much better measurement than the average figure because the median is less sensitive to extremes - in the case of salaries, to high income-earners. For this reason, publishing the median salary is common practice, especially in countries with high inequality, such as Israel. A large difference between the average and median salary indicates great inequality.
Yashiv found that, in the past 40 years, the median salary has averaged 80% of the average salary. The median salary fell from 94.2% of the average salary in 1975 to 74.1% of the average salary in 2010. "Over time, the distribution in salaries has become increasingly positively distorted (the gap has widened)," Yashiv told "Globes". "This is mainly because of the rise in high incomes among a small group of wage-earners. As a result, the average salary has risen faster than the median salary over the years."
Yashiv adds, "We're talking about greater inequality. When talking about income from labor, it turns out that high-income earners are making greater progress than the rest." He attributes part of this to technological changes, which "bring about a more rapid increase in productivity in skilled jobs. There is a tight correlation between labor productivity and salaries, and this stands out in high tech."
Yashiv says that part of the widening gap is due to "the slow progress by low income-earners because of the slew of problems in the Israeli labor market, including competition between different groups of the working poor, including labor migrants, the growing shift to piecework, and the growing demographic weight of poor groups (in labor market terms), such as Arabs and haredim (ultra-orthodox)."
Yashiv also offers another factor - polarization in the labor market. "Mid-range income-earners are weakening vis-à-vis high income-earners and low income-earners in terms of the rate of growth in salaries over time. We've seen the same trend in many Western countries over the past 30 years."
An analysis by "Globes" of OECD salary data for 2008-09 found that the difference between Israel's median and average salary is far below the OECD average: 73.5% compared with 85.6%. Denmark tops the list at 98.7%, followed by New Zealand, Finland, Norway, Canada, Austria, Australia, Switzerland, Iceland, the UK, and Japan (between 80-90%).
Published by Globes [online], Israel business news - www.globes-online.com - on November 8, 2012
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