Israel’s annual vacation pay allowance to rise by hundreds of shekels

Israel’s Histadrut labor federation and the private-sector employers’ confederation signed a new collective agreement on Monday to raise the daily vacation pay allowance, known as dmei havra’a, for private-sector workers. Under the deal, the daily rate will increase from 418 shekels to 451.5 shekels.

The change will apply to all employers and workers only after Labor Minister Yariv Levin signs an extension order. The agreement has already been sent to the Labor Ministry for approval. In the public sector, the allowance was also updated in line with the consumer price index, rising to 511.6 shekels a day from 471.4 shekels, the level used over the past three years.

Officials said the higher rates should add hundreds of shekels a year to each worker’s annual pay. An estimated 2 million to 3 million workers could benefit. The move follows two years in which the allowance rates were frozen and one vacation-pay day was cut, amid the war triggered by Hamas’ October 7 attack and the resulting “Iron Swords” war.

Histadrut chairman Arnon Bar-David said workers had carried the burden during the war and it was time to give something back. He called the agreement “a significant announcement for millions of workers” and urged the Labor Ministry to complete the extension quickly so all workers would receive the increase. Dovi Amitai, head of the private-sector employers’ confederation, said the deal corrects an injustice toward private-sector employees who kept the economy running during the war and reflected recognition of their contribution.