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Despite Recession Fears, Govt. Officials Get Fat Raises

The world's economic problems are likely to affect Israel soon, PM Netanyahu says - a day before he and other officials get salary raises.
By David Lev
First Publish: 11/24/2011, 1:13 PM

Binyamin Netanyahu
Binyamin Netanyahu
Flash 90

Israel's economy is strong – strong enough to allow the government to increase spending on social programs, says Prime Minister Binyamin Netanyahu – but the struggling economies in the U.S. and Europe are set to have an unpleasant impact on Israel in the coming months, he told MKs in a Knesset speech Wednesday.

Advocating caution in spending, Netanyahu told MKs that “we have acted responsibly until now, and we will continue to do so – not only in economics and society, education and infrastructure, but especially in security matters,” where, he said, Israel had no choice but to increase spending, as difficult as it will be.

Despite its current strength, Netanyahu said, Israel “is going to experience a very difficult period. We are not a separate continent and not an invulnerable island. The global economic shock will certainly affect us,” he said.

But that caution apparently does not extend to government officials – including ministers, MKs, and the Prime Minister himself – who will be getting automatic salary increases of between 2.5% -4% beginning in January. The 4% increase for MKs means an additional NIS 1,254, bringing their salaries to NIS 36,016 per month. Prime Minister Netanyahu will receive a 2.5% raise for an extra NIS 1,000, with his salary topping out at NIS 46,140 per month. President Shimon Peres' 4% salary rise means he will earn NIS 1,900 more than he does now, with his salary reaching NIS 52,809.

The biggest “winner” is High Court president Dorit Beinisch, whose NIS 2,138 salary increase brings her monthly salary to NIS 60,183. Other ministers will receive an increase of NIS 927 per month, to NIS 38,147.

The officials' salaries are raised annually because they are linked to the increase in the average wage in Israel's economy – a figure that has grown significantly in the past decade, due to the growth of wages in the high-tech sector. Former Finance Minister Avraham Shochat sought to change the law several years ago to link all government salaries to the cost of living, the standard used to negotiate agreements with union members. However, the Knesset exempted itself and some senior officials from that standard – resulting in a 4% wage increase for many government officials. The Treasury has been attempting to implement the changes that Shochat sought, but the union representing senior judges – who qualify for raises under the higher average-wage standard – are strongly opposed to the change.

Meanwhile, according to business newspaper The Marker, Israel's economy is actually in far worse shape than Netanyahu or most Israelis believe. The newspaper cites a large number of recent debt restructuring agreements by some of Israel's largest companies as evidence that the “debt bug,” which is badly shaking governments and corporations all over the world, is epidemic in Israel as well.

“The list of major companies that cannot pay their debts includes Yitzhak Tshuva's Delek Real Estate, the Gaon and Zebeda families' ACE Auto Depot and perhaps the Ofer family's Zim shipping company, which would be facing its second debt restructuring in two years,” The Marker says, adding that “these are just some of the best-known companies in dire financial straits. It's not just overleveraged companies that are in trouble; many other firms could hit difficulties in the face of a global slump.”