Israel’s income grew by 35% in 10 years – While the share of workers rose by 23%

On May Day the Adva Center published its annual report, “Workers, Employers and the Distribution of National Income,” by Dr. Shlomo Swirski and Etty Konor-Attias. According to Adva Cener: “From a macro-economic perspective, 2011 was a good year for the Israeli economy, whose economic growth was higher than that of other developed economies. From the standpoint of employees, the two most positive developments were the continued decline in unemployment, from 6.6% in 2010 to 5.6% in 2011, and the creation of 80,000 new jobs. At the same time, employees’ share in the national income remained at its 2009 level – 63% — which is still significantly smaller than it was at the beginning of the previous decade – 69%. The share of employers stayed at its 2010 level – 13% — significantly higher than it was at the beginning of the previous decade – 8-9%.”

A banner “Workers but not slaves”

Even if the percentage differences are small, the sums are significant. In 2011, for example, Israel’s national income amounted to NIS 735 billion, one per cent of which was NIS 7.35 billion. Had the employees’ share of the national income in 2011 been 69%, as it was in 2001, employees would have received the combined total of an additional NIS 44.1 billion. If we divide this sum by the total number of employees in 2010, approximately 3.204 million (excluding migrant workers from abroad) – we find that in 2011 each employee would have received on average an additional NIS 13,763 per annum, or NIS 1,147 per month.

In sum, the years 2001-2011 were more beneficial to employers than to employees. The national income grew by 35%, but while the share of employees rose by 23%, the share of employers rose by 85%.

Persons in the top percentile received a growing share of the national income. This is evident from the figures published by two different sources. According to the figures of the State Revenues Authority, the top percentile of both salaried and self-employed persons held 14.1% of all gross income in Israel in 2010 – an increase of 34% between 2005 and 2010. This figure positions Israel close to the top of those countries in which persons in the top percentile are very wealthy (See the following table).

Senior executives are one constituent of the top percentile. The salary costs of executive directors of the 25 largest corporations on the Israeli Stock Exchange in 2011 amounted to NIS 9.8 million, on average, including NIS 3.0 million in salary, NIS 2.8 million in bonuses, and NIS 4.2 million in stock shares.

Dr. Swirski said: “The profits of the minority today are liable to turn out as a future loss for the Israeli economy and society, for employees who do not manage to maintain a decent standard of living, including a good education for their children, do not constitute a strong basis for long-term economic development.”

The report (29 pages, in Hebrew)