Understanding market competitive salaries in Israel is crucial for both employers and employees. A competitive salary attracts and retains top talent, while an under-market salary can lead to high turnover and decreased morale.

Factors Affecting Market Competitive Salaries

Several factors influence market competitiveness for salaries in Israel:

• Industry: Salaries vary significantly across industries. The high-tech sector, for example, typically offers higher salaries than traditional sectors like retail or hospitality.
• Experience & Skills: Employees with greater experience and specialized skills command higher salaries.
• Location: Cost of living varies across Israel, with Tel Aviv generally having higher living expenses than smaller cities. Salaries may be adjusted accordingly.
• Company Size & Performance: Larger, successful companies often have the resources to offer more competitive salaries and benefits packages.
• Education: Educational attainment can influence salary offers, particularly for specialized fields.

Determining Market Competitive Salaries

Several reputable resources can help determine market competitive salaries in Israel:

• Salary Surveys: These provide salary data based on surveys of employers and employees.
• Government Statistics: The Israel Central Bureau of Statistics publishes data on average salaries by industry and location.
• Recruitment Agencies: Reputable recruitment agencies stay informed about current salary trends and can provide valuable insights for specific job roles.

Using Salary Data Effectively

Salary data from various sources should be used as a guide, considering the factors mentioned above. It's essential to tailor your research to your specific job title, industry, location, and experience level.

The minimum wage in Israel is determined by the National Minimum Wage Law (1987), which guarantees a baseline income for all workers and is linked to the country's average wage.

Current Minimum Wage

The minimum wage is defined as a monthly amount, as well as daily and hourly equivalents. The most recent increase came into effect on April 1, 2023. The current minimum wage (as of April 1, 2023) is broken down as follows:

• Monthly: ₪5,571.75
• Daily (for a 5-day workweek): ₪257.16
• Daily (for a 6-day workweek): ₪222.87
• Hourly (for a total of 186 hours/month): ₪29.96
• Hourly (for a total of 182 hours/month): ₪30.61

Automatic Adjustments

The National Minimum Wage Law establishes a unique system for automatic adjustments. The minimum wage is not a fixed amount but rather tied to 47.5% of the average wage in Israel. This means the minimum wage automatically increases whenever the average wage rises. The Ministry of Labor and Social Affairs is responsible for publishing the updated minimum wage rates.

Applicability

The minimum wage applies to all employees in Israel, regardless of their profession or industry, with a few exceptions. These exceptions may include certain types of apprenticeships or volunteer work. Migrant workers are also entitled to the minimum wage, although enforcing these rights can be challenging.

Israeli employees are entitled to a comprehensive benefits package that includes both mandatory and discretionary elements.

Mandatory Benefits

Employers are required to contribute a set percentage of the employee's salary towards social security benefits. These benefits include pension, disability, and unemployment insurance. Additionally, Israeli law mandates a minimum of 10-23 paid vacation days per year, depending on seniority, along with eight paid public holidays.

Employer-Discretionary Benefits

Many companies offer tax-deductible holiday bonuses twice a year, typically for Rosh Hashanah and Passover. To offset meal expenses, employers may provide meal allowances or vouchers. Some companies may offer a yearly recreation payment as a supplementary benefit, although this is not mandated by law.

Employers may also contribute to a monthly study fund for their employees, which offers tax advantages after a specific accumulation period. In certain industries or for senior positions, companies might offer company cars or car allowances. To incentivize employee referrals, some companies offer bonuses for successful hires brought in by existing staff.

In Israel, employee payroll cycles are governed by a well-defined set of regulations. The standard payroll cycle is monthly, with employers legally required to pay their employees at least once a month. Companies have the flexibility to implement more frequent pay schedules, such as weekly or bi-weekly. However, any deviation from the monthly cycle should be explicitly mentioned in the employment contract and the organization's official payroll policy.

Payment Deadlines

For the chosen pay frequency, employers must ensure salaries are distributed by a specific deadline. In the case of the most common monthly cycle, employees must receive their earnings by the 9th of the following month for the work performed in the previous month.

Overtime Compensation

Overtime work comes with specific compensation requirements. Employers are obligated to pay 125% of the employee's regular wage for the first two overtime hours in a day. This percentage increases to 150% for any subsequent overtime hours.

Recreation Payment

The concept of a "recreation payment" in Israel is important to understand. Unlike some countries, Israel doesn't legally mandate a 13th-month salary. However, employees are entitled to a recreation payment after they complete one year of service with the company. This payment is typically made between July and September. The exact amount is determined by law and is updated annually. It corresponds to the number of years an employee has been with the organization.