The freeze on minimum wage and pensions highlights the government's prioritization of military funding over social welfare during times of conflict.
The opposition from various stakeholders indicates a potential political challenge for Netanyahu's administration, which may have to reconsider its budgetary strategies.
If the freeze is implemented, it could exacerbate economic hardship for low-income workers and pensioners, potentially leading to increased social unrest.
The ongoing military conflict and financial pressures may lead to further austerity measures in the future, impacting various sectors of the economy.
Israel's Finance Ministry is proposing a freeze on the minimum wage and government pensions, which were scheduled to increase on January 1, as part of measures to manage the financial impact of the ongoing war in Gaza and Lebanon. This decision is expected to save approximately 1.2 billion shekels ($322.1 million).
The current minimum wage stands at NIS 5,880 ($1,578) per month, and its future increase is tied to the average salary, which has risen by about 6% over the past year. Freezing the minimum wage could result in workers missing out on an increase of more than 300 shekels per month ($80.53).
The proposed freeze has met with significant opposition, including from the Israeli Labor Federation (Histadrut) and even some members within Prime Minister Benjamin Netanyahu's government. The likelihood of the proposal passing appears low, given the pushback it has received.
The International Monetary Fund (IMF) has downgraded its growth forecast for the Israeli economy to 0.7% for the current year, down from a previous estimate of 1.6%. This revision reflects the financial strain caused by military expenditures related to the ongoing conflict.
