Wage gaps shape Israeli society

Like many things in the Israeli economy, the increase in the average wage is good news for the strong and bad for the weak, because it has only widened the gaps. The gap between the high-tech and financial industries and the industries that did not recover from the corona crisis increased by 10% to 20% in two years. If the jump in the cost of living is taken into account, it means that there are workers who contain it without feeling and there are workers who find it more difficult.

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In the last two years, the system has treated the average wage as a biased figure due to the decline in the number of low-wage earners. but Data from the Chief Economist at the Ministry of Finance, Shira Greenberg, indicates that in the last two years there has been a real average increase of 3.2% in the average salary every year, even after taking into account the change in the salary mix. This is surprising, since in previous economic crises there has been a decline in the average wage. A major reason for this is the great boom in the high-tech industry following the corona crisis.

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High-tech workers. A double increase in the average wage than in the whole economy

(Photo: Dana Kopel)

Indeed, the data show that the increase in the average wage was divided very unequally. Thus, for example, the average wage in the industries associated with high-tech was double that of the economy as a whole. In the information and communication industries, there was an increase of 6.2% per year and in the professional, scientific and technical services industries, there was an increase of 5.7%. There was also an increase of 5.4% per year in the banking and insurance industries.

In contrast, in industries that require low skills as well as in industries that have not yet emerged from the corona crisis, there have been low increases, which means a real decline or even a real drop in the average wage. In the accommodation and food services, which have not yet recovered, there was an increase of 0.5% per year, ie a decrease of 2.7% relative to the economy. In the arts, entertainment and leisure services there was a decrease of 3.2%, ie relative to this economy a decrease of 6.4% per year. A decrease of 3.1% (6.3% in real terms) was also recorded in the transportation and courier services. In total there are gaps of 20% -10% in two years between the strong and weak industries.

The economist notes that usually the industries in which wage increases were recorded were industries in which the number of employees increased. What is interesting is that there is a real reduction or decrease in wages even in industries where there is a great shortage of workers, such as hospitality and food, which means that there may not be a possibility for wage flexibility.

For years, employment experts have been anticipating a situation where as the economy becomes more sophisticated, technological and online – the employment market will become more polarized and will consist of jobs that require low skills and jobs that require high skills. In such a market there will be fewer and fewer intermediate jobs, which will be replaced by mechanization. The hard data released by the Treasury show that the corona has accelerated the polarization process. For a company, any company, a situation of large wage gaps with structural difficulty in mobility is in very bad news. It is bad for social stability and therefore it is bad for democracy.