Israel's Defense Ministry Overhauls 62-Year-Old Salary System

Israel's Ministry of Defense has implemented a significant overhaul of its salary structure, replacing a 62-year-old system with a new collective agreement set to run until August 31, 2030. The reform, negotiated between the Histadrut labor federation, the Ministry of Finance, the Defense Ministry, and the workers' committee, eliminates performance-based bonuses in favor of fixed percentage increases to base salaries. This change aims to provide employees with more stable income and clearer pension benefits, as a substantial portion of previous bonuses will now be incorporated into the permanent salary, impacting pension rights.

The protracted negotiations centered on the bonus system, deemed outdated and no longer suitable for current employment conditions. While the old bonus system is abolished, the new agreement retains performance-based bonuses for the top 25% of employees in various professional groups, amounting to several thousand shekels annually. Additional financial incentives are also provided for employees in higher ranks (42-44 and above). The reform also introduces a monthly payment for employees who do not use sick leave within a specified period, intended to encourage regular attendance.

Histadrut Chairman Arnon Bar-David hailed the reform as a restoration of justice, emphasizing the provision of stable income and pension prospects. Defense Ministry Director-General Amir Baram stated the new system aligns better with the ministry's modern strategy and enhances pay transparency by linking it to employee contributions. Ministry of Finance representative Efi Malkin noted the previous mechanism faced criticism, including from the State Comptroller, and that the new agreement resolves a long-standing dispute while introducing incentives to reduce sick leave.

Representatives from the engineers' and technicians' union and the Defense Ministry's workers' committee also highlighted the agreement's importance. The reform is expected to provide thousands of employees with a more stable income structure. This development follows a recent report by the Ministry of Finance detailing significant salary and pension increases for security personnel during 2023-2024, attributed to the ongoing events in the country.