Workers, Employers and the Distribution of Israel’s National Income – Labor Report 2014

The report reveals the worsening of the share of workers in Israel between 2004 and 2014

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The report reveals that in 2014, the workers’ share of Israel’s national income remained the same as in 2013: 57% — a lower share than their share in 2004, which was 61%. The share of employers – 17% — declined somewhat from its peak in 2013.

Even if the difference is a few percentage points, the amounts are quite large. In 2014, for example, Israel’s national income totaled NIS 927 billion. One percent of this was NIS 9.27 billion. Had the workers’ share remained the same as it was in 2004 – that is 61% (and not 57% as it was in 2014), workers as a whole would have received in 2014 NIS 37.08 billion more in salary. If we divide that sum by the number of persons in the labor force in 2014 – approximately 3.8 million (including soldiers in compulsory and professional service; not including foreign workers) – we will find that for that year, each worker would have received, on average, an annual addition of NIS 9815, or about NIS 818 per month. However, the addition went to employers, not to workers.

Further evidence of the worsening of the share of workers: between 2004 and 2014, the national income grew by 52%, while the share of employers grew by 78% and the share of workers by only 42%.

Additional findings of the report:

· In 2013, 27.5% of employed persons received salaries defined by the OECD as low – up to two-thirds of the median salary. The share of low-income workers in the national income was 7.2% in 2013. At the same time, the share of the top one percent was 6.9% of the national income – similar to the share of more than one-fourth of workers.

· Among low-wage earners were to be found 35% of women workers, 30.9% of Arab workers, 36.1% of workers lacking matriculation diplomas, and 26.9% of workers who were immigrants from the former Soviet Union.

· In 2014, the average monthly salary bill of top executives of the 25 largest corporations traded on the Tel Aviv Stock Exchange was NIS 417,000, lower than that of 2013. Still it was 44 times the average salary of Israeli workers and 97 times the minimum wage.

· The social security benefits paid by Israeli industrialists are lower than those paid by industrialists in most OECD countries.

Behind the continuing decline in the workers’ share of the national income is the weakening of their bargaining power vis-à-vis employers and the government, which is itself a large employer. The bargaining power of workers has become weaker first and foremost due to the decline in union membership. Following are a number of figures based on research and analysis of the Central Bureau of Statistics Social Survey.

· In Israel, the decline in union membership has been especially rapid: in 2000, 45% of workers were unionized. Six years later, in 2006, the percentage had declined to 34%, and approximately half of the workforce was covered by collective labor agreements. Six years later, in 2012, only 25% of workers were union members and only 30% were covered by collective labor agreements.

· High unionization rates can be found in the following industries: water and electricity (86%), education (52%), and public administration (46%). These sectors still remain primarily in public hands. In the private sector, unionization rates are much lower, between 5% and 13% in services, food services, trade and construction. In banking, insurance and financial services, about one-third of workers are unionized. The lowest unionization figures are to be found among contract workers, whose employment mode makes it almost impossible to unionize them.

· High unionization rates are characteristic of academic occupations – 42.3%, and professional and technical occupations, including teachers – 34.1%. High unionization rates also characterize highly educated full-time workers receiving high pay. This can be seen as evidence of the connection between unionization and good jobs and high salaries; the other side of the coin is, of course, the difficulty of organizing workers at the bottom of the salary scale.

In recent years, since about 2008, Israel has witnessed a new wave of unionization. This is the result of the emergence of a new labor union – Koah LaOvdim – and of new unionization initiatives on the part of the General Histadrut and the National Histadrut. This may signal a change in the two-decade old trend of declining unionization, especially in the private sector.

Below are additional findings from the report:

· About 150,000 workers set up workers’ committees and joined unions, most of them in 2013 and 2014.

New unionization efforts occurred in the following sectors:

· In the private sector – in the areas of telecommunications, media, insurance and transportation;

· Among young people employed in fast food industries;

· Among contracted workers and non-governmental providers of social services;

· Among education workers, college lecturers and alternative medicine practitioners.

It should be noted that anti-unionism is the norm among employers, who use a variety of means to hamper unionization initiatives, among others, delaying tactics in negotiations with workers, fragmentation of the bargaining unit to make organization harder, and harassment of leaders. Steve Adler, past president of the National Labor Court, noted that “in Israel as in the United States there has emerged an industry of experts in frustrating unionization efforts.”