A top economic adviser to Prime Minister Binyamin Netanyahu said that he favors reducing some of the economic protections foreign workers currently have – including repealing rules that require paying them the minimum wage and providing them with social benefits, such as pensions. Speaking to Yisrael Hayom, Professor Avi Simchon, head of the National Economics Council, said that it was not necessary to pay foreign workers the relatively high wages they receive in Israel. “A foreign worker does not need to receive seven times the salary he would make in his home country,” said Simchon. “Removing them from regulations requiring payment of the minimum wage would reduce the cost of living.”
One argument against a two-tiered wage system is the fear that lower-paid foreign workers would take jobs from higher-paid Israelis; that, in fact, is the main reason why the Knesset legislated that foreign workers get paid the same wages and receive the same social benefits, including state-mandated pensions, as Israelis do.
But Simchon said that foreign workers would not “steal” jobs away from Israelis, even if they were paid less – because Israelis were not working in the industries that foreign workers were. “Most of the foreign workers are employed as caretakers for the elderly or disabled,” said Simchon. “Those receiving this care are generally partially reimbursed for their expenses by the National Insurance Institute (Bituach Le’umi). Another large group of foreign workers is employed in agriculture, and here their employers absorb the full brunt of the money they are paid.
“When we raise the minimum wage, our intention is to help Israeli workers and ensure that they do not end up making less than a living wage, and when we work to provide them with social benefits, it is to ensure that they can live a decent life when they retire. None of these apply to foreign workers,” Simchon said. “In their home countries they might be making NIS 1,000 a month. There is no reason we have to pay them NIS 7,500 a month.”
If there were many Israeli workers competing for jobs in elderly care or agriculture, the issue of preferential hiring for lower-paid workers would be relevant. As Israelis are not interested in these jobs anyway, the lower wages for foreign workers will not harm them or the economy, he said. “As long as we maintain the current policies of admitting foreign workers for jobs in these sectors, Israeli workers will not be harmed,” Simchon added.