Many workers in Israel receive no rights whatsoever. Employers take advantage of payroll law in order to sneak in the payments to cover legal rights that an employer should pay and then consider it part of the overall pay. This system is often used to deprive workers of pension payments, vacation days, sick days, and even transportation to and from work.
How is this done? There are a couple of ways to do this. It can be done by writing long contracts that stipulate a lower wage amount than the amount originally presented. Then afterwards the legal amount for each right is added. For example, let’s say I advertise that I am looking for someone to work for 60 shekels per hour. I can write a contract that states that the worker will get 30 shekels + transportation, which I value at 15 shekels. + pension substitute + vacation substitute + sick day substitute = 60 shekels (note: I am making up the numbers here). Alternatively, a contract can be written only paying for the hour worked, by the hour, even if it is a part or even full time job.
So what’s wrong with this? Doesn’t the worker get his money anyways? Yes and no. When one sees a job that pays 45 shekels per hour for 10 hours a week, he or she expects 450 shekels plus the legally required minimal benefits. But in this case, the worker expects one wage, then gradually understands all the different items that the wage covers, effectively lowering the wage that the worker gets paid. The worker, usually lower level, thinks he or she is finally getting a break and not earning the minimum wage, just to find out that they actually are. Most people do not do the math, so it is really the corrupt taking advantage of the complicated legal jargon in order to drown the average worker.
What is the real danger of this system? Economically speaking this system moves the burden of all of these programs and payments that should be covered legally onto the shoulders of the worker. In English, this system is a form of deception abused in order to steal from the poor. Also, these “by the hour” contracts are also used to fire sick workers, pregnant women, and pretty much anyone at anytime without any recourse.
So why is this legal? This system is legal because it allows small businesses to hire people for occasional services without the worker being an independent business by himself. Imagine what a pain in the neck it would be for me to have to open a tik or register as a worker, even if I am just working one time for a couple of hours. The problem is that this system is taken advantage of by clever lawyers and corrupt businessmen who have no regard for their workers.
If you’ve been following this blog, you’re probably looking at me now saying “okay mr. smarty pants, what’s the solution” Well, I’m glad I asked.
As always, knowledge is the key. But in our case a tool is needed in order to provide this knowledge. This brings me to my current pet project, the job payoff index. The job payoff index is an index whereby any job can be evaluated for what it really pays, including all benefits, in order to give a worker one solid number that he or she can use to compare jobs and measure what each one really pays, looking past all the legal mumbo jumbo. Dishonest employers would no longer be able to tout large deceitful hourly wages once the truth is opened wide and set for all to see.
Additionally, the index would also help job seekers looking for a subjective way to compare the payoff of several offers. For example, this system would allow me to compare one job that offers a car with another that has a better pension plan and more vacation days.
The job payoff index would use the following formula: The salary and benefits paid by a job minus the minimal salaries and benefits that must be paid by law. Obviously, I just listed a very hard bunch of variables that need to be defined. For example, what is the real price of having sick days? What is the cash equivalent of not getting a pension? What is the price or stability and being warned before being fired? I have to work this out.
If anyone out these is a numbers nerd, an economic nerd, or a current employer who knows the laws, I’d greatly appreciate your help. You can e-mail me at email@example.com and I’ll tell you where I am holding, what I think I need, and ask for your opinion on the matter.
I thank everyone in advance for considering helping. I think we could work together to really make a difference. Thanks and Kol Tuv.