Daily Israel Report

Raising Minimum Wage Sore Point in Kadima-Labor Negotiations

Labor’s campaign pledge to raise the minimum wage to $1000 a month (NIS 4600) has become a sore point in negotiations between Labor and the Kadima party, charged with forming a government coalition.
By Scott Shiloh
First Publish: 4/18/2006, 10:47 AM / Last Update: 4/17/2006, 12:09 PM

A compromise proposal to lift the minimum wage by NIS 500 to NIS 4000 by the fall has been rejected by Kadima coalition negotiators, on the grounds that it will add NIS 1.7 billion ($370 million) to the state budget.

Kadima officials say, however, that they have no objections to making an NIS 4600 minimum wage one of the “goals” of the emerging Kadima-led government headed by Interim Prime Minister Ehud Olmert.

David Libai, chief Labor party negotiator, a prominent attorney and former Justice Minister, said, “We do not disagree on the need to raise the minimum wage. The question is at what pace and by what rate. The disagreements can be bridged. In my eyes there is no crisis."

But Kadima, so far, has only suggested raising the minimum wage by NIS 250 over the course of a year. Additional increases would be evaluated by a committee made up by representatives of the government, employers, and the Histadrut Labor federation. That committee would not be formed until July 2007.

Kadima officials accused Labor Party leader Amir Peretz of acting against the best interests of the country’s workers. One official claimed that Peretz’s minimum wage demand would destroy the hotel industry. "It appears that Amir Peretz is not worried about the minimum wage,” said the official. “He's worried about the minimum with which he can get out of the issue with dignity. Even Labor understands that his demand is problematic."

Kadima’s chief coalition negotiator, Yoram Turbobitz, said that the Labor party’s economic demands were cause for worry. “When I look at the list of demands coming out of that party’s [ideological] school, we are worried, because none of us has the right to break [the budget].

“On this issue we are obligated to take care and determine how we’re going to preserve [the budget]," said Turbovitz.