One plank of the Labor Party platform in Israel is an increase of the minimum wage to about US$1,000 --- which is actually about half the median wage after taxes in Israel. According to Amir 'anusclown' Peretz, this would be a decisive blow in the war on poverty.
Criticism from free-market advicates is, well, predictable. Somewhat surprising is an op-ed by Hanna Zohar of Israeli worker's rights lobby Kav la-Oved (freely: "workers hotline").
Unlike Peretz's trade union Histadrut --- whose main rationale appears to be adding even more to the already bloated wages of a small minority of Israeli workers --- Kav la-Oved mostly deals with the problems of people the Histadrut doesn't lift a finger for: foreign workers, employees of manpower companies, and the like. As a result, their perspective is a little different.
Ms. Zohar points out that the greatest problem is not the Israeli minimum wage being too small, but that it itself is not being enforced, and employers violate labor law with seeming impunity. In order to keep down labor costs and especially the excessive difficulty of firing redundant or incompetent employees, an ever-greater number of organizations (including universities and government offices) outsource work --- particularly custodial and security, but increasingly also general office tasks --- to manpower agencies. The lowest bid gets the tender pretty much without questions asked about what they pay their employees. As a result, an ever-larger number of Israelis find themselves working for manpower agencies/security companies/cleaning contractors/caterers/... at sub-minimum wages, without any fringe benefits or union protection of any kind. Other companies or organizations, pleading financial difficulties, let employees go unpaid for months at a time.
The latest National Insurance report on poverty in Israel presented a relatively new datum: 41 percent of the poor work part- and full-time. The growing phenomenon of violation of disadvantaged workers' rights is the main reason for their being driven below the poverty line. This phenomenon is not restricted to subcontracted workers, where a reality of labor rights violations looks like an inevitable fact of life. New victims include directly employed workers in marketing, communications, transportation, tourism and so on. We are talking here about violations of the basic legal rights of workers, violations that amount to a criminal offense.THERE ARE various reasons for this widespread violation of the law. Privatization, unemployment, globalization and the weakening of trade unions. In this reality, enforcement mechanisms should have moved more intently to contain the widespread violation of labor rights, which amounts to an attack against the rule of law, contributes to social gaps and to deeper more widespread poverty. But in fact so little has been done that one can add "lack of enforcement" to the list of causes of the contemporary poverty trap.
In light of the processes affecting the Israeli labor market, what is required is not only more manpower for enforcement, but also deeper and more acute means of deterrence, which will exact a high price for violations of labor rights. Today, violating labor rights simply pays off. The tough competition in the Israeli market reduces the number of competitors.
The survivors are bigger companies, which employ more and more workers. This is the case in security, tourism, communications and retail food marketing, where companies employ hundreds or thousands of workers. Systemic under-payment and violation of labor rights, even in small amounts, can add up to significant profits.
Enforcement authorities in the Ministry of Industry, Trade and Labor do not understand - or do not want to understand - the need for changes in enforcement mechanisms. Demands by Kav LaOved and other activist groups are met with indifference.
n May 2005 attorney Eran Golan from Kav LaOved petitioned the Supreme Court to order the ministry's Labor Enforcement Division to publish the names of companies fined for violation of minimum wage. Despite the ministry's eventual consent, which was endorsed as the court's ruling in July, the ministry has still not disclosed the list of delinquent employers, and apparently does not intend to do so. Kav LaOved will have to return to the court and petition again, this time against the ministry's contempt for the court's ruling.
The Treasury has a key role in deterring employers against violation of labor laws. By setting minimum requirements for public tenders, it can prevent convicted labor law delinquents from accessing such tenders, including public security and cleaning tenders, licenses for private welfare services (nursing homes, hospitals and hostels), and public transportation licenses. But the Treasury prefers the lowest bid, even if it is clear that the cheapest offer relies on past and future violations of labor laws.
If law-breaking companies or organizations get punished at all, it is generally by imposing fines that are a fraction of what they save by cheating their workers of what they are entitled to by law.
Ms. Zohar didn't quite go as far as to describe the calls for increasing the minimum wage to US$1,000 as "political masturbation", but that's exactly what yours truly calls it.