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Israeli Union, Employers Agree on Minimum Wage Rise

Jan. 2 (Bloomberg) -- Israel’s Histadrut federation, the largest labor organization in the country, reached an agreement with an umbrella employers’ organization on an increase in the minimum wage.

Under the agreement, the minimum wage would rise to 4,100 shekels ($1,160) in July 2011 and to 4,300 shekels in October 2012 from the current 3,850 shekels, the Histadrut and the Federation of Israeli Economic Organizations said in a joint e-mailed statement today. Members of the federation include associations of manufacturers, hoteliers, farmers, security companies and others.

The two groups will ask Industry, Trade and Labor Minister Binyamin Ben-Eliezer to extend the agreement to cover the entire economy, the statement said. They may also seek to pass a law mandating the increase, it said.

The increase in wage costs could result in a rise in unemployment and damage the competitiveness of the Israeli economy, especially during a period when the domestic currency is strengthening, the Finance Ministry said in an e-mailed response to the announcement.

The Histadrut and the employers will seek an agreement with the Finance Ministry on the issue, Ben-Eliezer said in the statement. If no agreement is reached the minister can consider whether to make the change in legislation or through a ministerial order, according to the statement.

Ben-Eliezer said he is in favor of increasing the minimum wage, as long as it is done in consultation with all of the relevant government bodies.

Approximately 600,000 workers earn the minimum wage, Histadrut spokesman Eyal Malma said in a telephone interview today. There are close to 3 million salaried employees in Israel, according to Central Bureau of Statistics figures.

Unemployment rose to 6.6 percent in October, from 6.5 percent the previous month, the Central Bureau of Statistics reported on Dec. 23.

To contact the reporter on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net

To contact the editor responsible for this story: Louis Meixler at lmeixler@bloomberg.net

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