Knesset Passes Bill to Limit Salaries for Bank Execs

YERUSHALAYIM -
Bank Discount’s head office in Tel Aviv. (PikiWiki Israel)
Bank Discount’s head office in Tel Aviv. (PikiWiki Israel)

With 56 MKs in favor and none opposed, the Knesset has passed into law a bill that limits the salaries of executives in the financial sector. The new legislation will limit senior managers of financial institutions, including banks and investment houses, to 44 times the salary of the least paid workers in the organization, or a limit of NIS 2.5 million annually, assuming the lowest paid workers earn the minimum wage.

The legislation was proposed by Likud MK Miki Zohar with the backing of Finance Minister Moshe Kachlon, who came to an agreement on the deal with Knesset Finance Committee chairman MK Rabbi Moshe Gafni.

Institutions are free to pay their executives as much as they want, but will have to pay excise taxes on the amount being paid to the executive in excess of the limit. Statistics indicate that the salaries of many of the top executives in the financial system are as much as 100 times greater than their lowest-paid workers, according to studies on the matter.

Zionist Camp MK Shelly Yachimovich praised Kachlon for a proposal that would limit the salaries of executives in the financial sector – and called for the limitations to be expanded to other sectors of the economy, including public companies. The limitation of the salaries that is set to be proposed in the Knesset is “an important achievement,” Yachimovich said. “Hats off to Minister Kachlon for being the first finance minister to tackle this issue.”