Israel Defense Ministry Overhauls Decades-Old Salary System

Israel's Ministry of Defense is implementing a major salary reform, the first in over 60 years, affecting thousands of employees. The new system, agreed upon by the Histadrut labor union, the Ministry of Finance, the Ministry of Defense, and employee representatives, will be in effect until August 31, 2030. The core change involves shifting a significant portion of variable performance-based bonuses, known as "Shahar Ha'idud," into permanent salary components. This adjustment will impact employees' future pensions and social benefits.

Under the reform, administrative staff, engineers, technicians, and MAHAR category workers will receive a 14.3% permanent salary increase. Social workers will see an increase ranging from 10.73% to 15%. While variable bonuses are reduced, they will not disappear entirely. The top 25% of high-performing employees in relevant professional categories will still be eligible for annual bonuses of several thousand shekels. Additional payments are also designated for senior staff and students working at the ministry who meet specific goals.

The reform also introduces financial incentives for employees who do not take sick leave for a defined period, offering an additional monthly payment. The Ministry of Defense stated that the previous system was outdated and no longer aligned with modern labor principles, citing a disconnect between bonuses and actual employee performance as a key issue.

Histadrut Chairman Arnon Bar-David hailed the agreement as a historic correction of injustice, emphasizing that the shift to permanent salary components will enhance workers' financial stability and pension benefits. Ministry of Defense Director-General Amir Baram linked the changes to an updated personnel policy that recognizes professional achievements, contributions, managerial tasks, and innovation.