Now it’s official: The global cost of living index for 2021, published by The Economist, shows that Tel Aviv is at the top of the world rankings for the first time. Since the publication of the index, which examines the prices of 200 basic products and services in 173 cities around the world, the Israeli media has dealt extensively with its conclusions, and various economic interpretations have been written about the rise of Tel Aviv. Most of the interpretations were full of various financial arguments, saturated with code words and technical terms (“the shekel is weak against the dollar”, “the interest rate at the central bank”, etc.).
But the matter is quite simple, and not to be confused: the reason Tel Aviv is the most expensive city in the world is not only because the price of certain consumer goods (jeans, a meal at McDonalds, etc.) is higher here than in expensive cities like Tokyo, Zurich and Hong Kong. The problem with the cost of living lies first and foremost in the fact that the salary in Tel Aviv is half the salary in New York, while the rent here is more expensive than in Paris.
True, the sampled indices paint a worrying picture of the cost of living we are dealing with here. A kilo of apples in Tel Aviv costs NIS 11.6, while in Paris it will cost NIS 9.8, which is outrageous. But this is not only outrageous, but really infuriating to think that while the rent for a two-room apartment in the city center will be NIS 4,557 in Paris, in Tel Aviv it will be – according to the Economist index – NIS 5,357! We suffer as consumers in the supermarket, but we are literally slaughtered as tenants. And maybe someone should also tell researchers from The Economist that NIS 5,357 for a two-room apartment is now considered a bargain.
So everything is expensive here. But what about our wages? The other side of the high prices we pay to live, is the low wages we receive as workers in the labor market in the country. According to The Economist, the average net salary in Tel Aviv is NIS 9,679 – about half of the average net salary in New York (NIS 18,866). It should be added that the average wage in Tel Aviv is even higher than the average in Israel.
The key to tackling the problem of low wages goes first and foremost through raising the minimum wage. The minimum wage in Israel currently stands at NIS 29.12 per hour, which is NIS 5,300 per month. This figure stands – according to data published last August – at 46% of the average wage in the economy, and at 65% of the estimated median wage in the economy. However, in many of the economically developed countries, the minimum wage is about 60% of the average wage. Tel Aviv is the most expensive city in the world, and Israel is one of the ten most expensive countries in the world, but unlike the countries that are at the top of the list of expensive countries with Israel – our wages here are significantly lower. For example, in Switzerland the minimum wage is NIS 67 per hour, in Norway it is NIS 62 per hour, and in Ireland and France it is NIS 37 per hour.
Since the outbreak of the corona crisis, many governments around the world have raised or plan to raise the minimum wage. US President Joe Biden has announced his intention to double (!) The hourly federal minimum wage, from $ 7.25 to $ 15 (which is $ 47.32 per hour). Germany’s new chancellor, Olaf Schultz, won the election when he promised His main choice was to raise the minimum wage to 12 euros per hour (which is 43.25 shekels per hour).
Here in Israel, too, the minimum wage should be raised to NIS 40 per hour, which is NIS 7,280 a month. For months, we in the “Standing Together” movement have been waging a public struggle over this demand, which is widely supported, and the bill for a minimum of 40 has already been supported by a quarter of the Knesset – about 30 MKs have signed it. Nearly two million employees earn a minimum wage or slightly more than the minimum wage.In addition, raising the minimum wage will also create a wave of wage increases in the economy that will benefit middle-class workers, who have a hard time finishing the month.
Israel is expensive, especially Tel Aviv. It does not just seem to us, now it is already really official. But this is not a fate. A simple and sensible policy move like raising the minimum wage – as many governments today do – can help us begin to deal with this unbearable reality. It’s time for a minimum of 40.
The author is a resident of Tel Aviv-Yafo, active in the “Minimum 40” campaign and in the “Standing Together” movement