Finance Committee Votes for Salary Cap on Bank and Finance Execs

YERUSHALAYIM -

In what was hailed by Knesset Finance Committee Chairman Rabbi Moshe Gafni (UTJ) as a historic decision, the committee voted unanimously in favor of reducing the maximum salary for bank and finance company executives from 3.5 million shekels to 2.5 million per year.

He expressed the hope that it would help to narrow income inequalities, which he warned, are “endangering the society.”

“We have to seize this historic opportunity, and send out a clear-cut message that such tremendous inequalities will no longer be tolerated,” Rabbi Gafni declared.

“There is no justification for the huge salaries common in recent years,” MK Rachel Azaria (Kulanu) said during debate before the voting.

“It is clear that the reason why they earn so much is not because of their extraordinary talent, but because they can—and the state should therefore step in,” she said.

“Such a large gap between the Governor of the Bank of Israel’s salary and that of a commercial bank CEO is unacceptable. It doesn’t show in any way that a commercial bank CEO is better at his job. More and more people are getting paid the minimum wage, but the average salary goes on rising, while the median salary does not, just because of those who are getting paid a high salary.”

The proposed new ceiling would restrict the maximum pay for the executives to 44 times that of the lowest-paid employees in the company. The chairman rebuffed a motion to bring it down further, to 35 times the lowest salary, and to impose tougher sanctions on executives who flaunt the ruling.

Rabbi Gafni commented: “We’re not saying that anyone getting a salary like this should be in prison, but we’re restricting him. We’ll have to keep track and see whether this has any real effect, and whether it is at the expense of people investing in financial institutions.”

He thanked Finance Minister Moshe Kahlon for his public backing of the measure, and noted that it was also supported by the Tax Authority and the legal advisor to the Finance Ministry. It will now proceed to the plenum for a second and third reading.