Cabinet to decide on cutting ministers' salaries

Economic crisis prompts Finance Minister Yuval Steinitz to propose ministers' wages be reduced by 5% per month by end of 2010. Cabinet to vote on Sunday; secretariat expects proposal to pass

Reuters | Published: 06.05.09, 11:20

The cabinet will discuss reducing the salaries of ministers, including the prime minister, on Sunday, and is expected to instruct the finance minister to request the Knesset's Finance Committee reduce their salaries by 5% per month, by the end of 2010.

The document explaining the proposal, which was initiated by Finance Minister Yuval Steinitz, reads: "The State of Israel has been affected by the broad global economic crisis. This may be the most serious and complicated crisis in the past few decades. The origins of the crisis are far from Israel's shores.

"The economic crisis is the result of events and decisions made in the United States and in other countries. However, as a result of the Israeli market's participation in the global market, and as a result of the general slowdown in the global economy, the Israeli market is greatly affected by it. It is clear that the shakeup of the world's economy has a dominant effect on the Israeli market."

The finance minister detailed the different aspects of the crisis, such as sharp drops in the capital market "that have harmed the public's wealth and its long-term savings". He also explained the credit crunch that was created, which led to a drop in market investments, damaged the scope of production and export, and brought about an increase in unemployment rates.

'Serve as a personal example'

According to the finance minister, in recent months there has been a sharp drop in the State's income from taxes, which has raised the budget deficit and the public debt. "In the year 2009, these trends are expected to continue and even worsen," he said.

Steinitz further stated in his proposal that, "Under these circumstances, the public's funds should be used in a cautious and calculated way. This should be done by implementing a policy that will deal with the economic crisis in an appropriate way.

"Alongside the various steps taking by the State, and in order to facilitate that market's tackling of the financial crisis and the slowdown that is costing billions of shekels, the cabinet ministers are obligated to serve as a personal example to protect the public's money."

Steinitz pointed out that the Knesset's Finance Committee has decided that the base salaries of senior government members including the president, ministers, deputy minister and Knesset members will not be raised in 2009.

"Due to the abovementioned," the finance minister wrote, "it is proposed that the ministers agree to a reduction in their salaries."

The first initiative to reduce ministers' salaries was raised in the preliminary budget hearings a few weeks ago by Justice Minister Yaakov Ne'eman. According to cabinet secretariat estimates, the proposal is expected to pass with a majority of votes.