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2015-12-07

Reasons behind Minimum Wage Law Failure

Two years after the implementation of the minimum wage law, a third of employees in the private sector are still receiving wages less than the specified 1450 NIS. Women are the most vulnerable to exploitation in terms of wages; half of the women employed in the private sector receive salaries beneath the specified minimum wage. 

Asma Marzouq – Palestine Economy Portal

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The implementation of the minimum wage law did not make a great difference for employees since in the first year of its implementation, 117 thousand workers received wages bellow the assigned minimum wage, and by the end of 2014, their number slightly decreased to 104 thousand workers. Noting that, the number of beneficiaries from the minimum wage law does not equal the difference between these two numbers. There are several reasons for the decrease in their number, such as the increase in unemployment especially in Gaza due to the last Israeli incursion. According to the Palestinian Central Bureau of Statistics (PCBS), it is difficult to calculate the number of beneficiaries of this law.

 

Where does the problem lie?

Dr. Samir Abdullah, Director General of the Palestine Economic Policy Research Institute, believes that the problem lies in the implementation of the law. Although it came into effect two years ago, the Government did not create any mechanisms for its implementation. He said, “The Government is unable to impose the law due to lack of sufficient supervision and punitive measures for organizations that do not comply.”

He adds, “Some sectors are unable to bear the extra burden created by this law because their workers’ productivity amounts to less than the assigned minimum wage, especially in the textile, yarn, and public services industries. If these institutions are forced to apply this decision, they might have to shut down or decrease the size of their staff.” He thinks that the law should have been carefully studied and linked to minimum wage, productivity levels, and geographic areas, before its approval.

“The Government should find a mechanism to deal with these sectors, through supporting the workers’ wages, setting a different minimum wage for these sectors, or excluding them from the minimum wage law altogether, taking into consideration that such institutions provide sustenance for tens of thousands of families.”

 

The MOL Confesses

Abdel Kareem Daraghmeh, Director-General of Inspection in the Ministry of Labor, agrees that it is difficult to implement the decision in some of the weak sectors. He also says that efforts to make an agreement to implement the minimum wage law in these sectors in return for receiving support have been unsuccessful.  

He further says, “The Government is responsible for the implementation of this law. When it was approved two years ago, the MOL was not provided with any new cars or qualified inspectors to carry on inspections. Instead, the Ministry had to bear the new big burden with its existing facilities. The Ministry does all that is possible by setting inspection plans for each directory.”

“We are currently conducting an inspection of all facilities in the West Bank, especially those employing women, in order to send warnings and report those are not complying with the law to the court.”

 

Workers do not Complain

Siham, who works in one of the kindergartens in Um Al-Sharayet, Ramallah, makes 800 NIS every month. She and her colleagues demanded that their employer implement the minimum wage law over a year ago. The employer refused, claiming that the financial situation of the institution will not allow her to. According to Siham, she told them, “If you don’t like this, quit.” It is to be noted that this kindergarten is unregistered and does not abide by the Labor Law, like many other kindergartens, nurseries, and small institutions.

Bothaina Salem, the legal consultant at the MOL, said, “The biggest problem we face in detecting employers who violate the law is the fact that the employees cover up for their employers due to fear of losing their jobs.”

 

Unfair Minimum Wage

The minimum wage, which falls below the poverty line (2300 NIS), has received many criticisms. However, determining the minimum wage was not an easy matter, and it was reached after difficult negotiations between the Government, employers, and the Labor Union. But, is it still acceptable after two and a half years of its approval?

Shaher Saad, Secretary General of the Palestine General Federation of Trade Unions, told the Palestine Economy Portal that, “The Union did not accept the minimum wage from the very beginning, and its representatives voted against it. But, it was approved by the majority of the committee, which consisted of different parties. The Union is still calling for raising the minimum wage.” He also mentioned that the decision includes an item regarding the possibility of raising the minimum wage depending on the cost of living during the annually held meeting between the Government, employers and Labor Union. This is what the Union is currently counting on.

 

Gaza Out of Equation

The minimum wage law was not applied in Gaza since it was approved before the formation of the National Unity Government in May 2014. Still, the Government has not worked on imposing this law in Gaza since its formation more than a year ago. According to the PCBS, the percentage of employees receiving a wage below the minimum wage in Gaza exceeds that of the West Bank and reaches 63% of overall workers in the Gaza Strip. The average monthly wage is 730 NIS in Gaza and 1100 NIS in the West Bank.

The MOL believes that the reason for the delay in implementing this law in Gaza until today lies in the economic situation in Gaza, especially after the last Israeli incursion that destroyed hundreds of economic institutions and led to raising unemployment to unprecedented levels. The Ministry expects that a committee will be formed to study the issue of minimum wage in Gaza.

 

Comparison with Israel

Abdel Fatah Abu Shukor, Professor of Economics at Al-Najah University, attributes that the weakness in the implementation of the law to the weakness in the representation of workers and the lack of inspection mechanisms. He compares the situation with that in Israel, where the Histadrut (General Federation of Labor in Israel) possesses a lot of power.

He says, “The Histadrut has a lot of power which allows it to play its role in placing pressure on the Government and the other parties. Recently, for example, after negotiations with economic organizations, the Histadrut was able to raise the minimum wage by 350 NIS, reaching 4650 NIS, and it is to be further raised by another 350 NIS after a year and a half.”

Also, despite the similarities in the prices of goods and services provided for the Palestinian and Israeli citizens, the income of Israelis is fifteen times more than the income of the Palestinians.

 

 

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