The labor market in Western countries in general, and in Israel in particular, has become increasingly dualistic. On the one hand, there is the primary market, in which employees receive average or high salaries and enjoy employment stability and social benefits in accordance with labor legislation, along with the possibility of development and advancement. On the other hand, there has developed a secondary market, characterized by low wages, hourly employment by contractors, high fungibility, workplace rights infractions and considerable instability. All this in addition to the reduction of mid-range jobs, having become superfluous due to technological developments. Several ongoing processes contributed to this situation: firstly, the transfer of industries characterized by unionization and employment stability to developing countries, concurrent with the growth of low-wage sales and service jobs. Secondly, privatization of public services, together with the development of the paradigm of flexible employment, the aim of which is to lower the cost of labor at the expense of stable full-time positions, and the development of precarious forms of employment in the public as well as the private sector. Thirdly, a sharp and continuing decrease in the percentage of organized workers whose workplace rights are protected by their unions.

These are the trends behind the phenomenon of low-wage employment. The present study examines the trends vis-à-vis such employment in recent years, as well as the characteristics of the workers themselves. The study was undertaken in view of the high percentage, in international comparison, of low-wage workers in Israel, the increase in the proportion of working families living in poverty, and the reduction of remuneration for work.

Low-wage work is not an inevitable phenomenon, and there are steps that can be taken to reduce its prevalence, as recommended by the OECD. These include periodically increasing the minimum wage,  buttressing public investment in active labor policies, strengthening government enforcement of workplace laws, and encouraging unionization, especially in the private sector.

Main Findings

• In 2021-22, 23.3% of employed persons worked for low wages – the highest proportion since 2015 (with the exception of 2020, the year of the Corona epidemic) and one of the highest proportions among OECD countries.

• Looking at gender, the proportion of women working for low pay is twice that of men – 31.5% compared with 15.9%.

• Throughout the period examined (2015-2021-22), there was an improvement in the situation of workers from peripheral areas, workers employed full-time, and workers who immigrated to Israel from the former Soviet Union. In contrast, the situation of Arab women and men, Haredi men, and workers aged 65 and over deteriorated.

• With regard to occupational sectors, the chances of unskilled workers and individuals employed in sales and services of being employed at low wages was extremely high, and those of skilled workers in both manufacturing and agriculture was also considerable.

• The increase in the proportion of workers with low wages occurred in tandem with the continuing reduction in the share of workers’ income in the national income pie. In 2024, the workers’ share was 56%, the lowest share in 25 years, in contrast to the share of employers, which reached a high of 24% — compared with 18% in 2000. This trend points to the increase in the profitability of employers, at the expense of the paychecks of employees.

• The social groups with the largest proportion of low-income workers include disabled persons, Arab women and men, Haredi women and workers of pension age. Among these groups, the proportion of low-income workers is over 40%.

• A multivariate analysis reveals that the size of the position (full-time, half-time, etc.) is the strongest variable influencing the chances of an individual’s working for a low wage. Controlling for position size and other variables, the chances of women to work for low wages is more than 70% greater than that of men.