Working
in
This survey can’t tell you
how soon you will work or how much you will earn, but it will attempt to
describe the basic components of salary and benefits which you may receive.
The following is a table of
approximate monthly gross incomes (in shekels – divide by 3.8 to translate to
dollars) for full time positions for salaried workers by profession:
|
Field |
Entering Salary* |
Experienced Professional* |
|
Computers |
6,000 –9,000 |
10,000 – 25,000 |
|
Accountants** |
4,000 –6,000 |
10,000 – 20,000 |
|
Engineers |
5,000 – 7,000 |
10,000 – 20,000 |
|
Economists |
6,000 – 8,000 |
10,000 – 20,000 |
|
Technical Writers |
5,000 – 7,000 |
10,000 – 20,000 |
|
Marketing |
5,000 – 8,000 |
10,000 – 20,000 |
|
Doctors |
5,000 – 8,000 |
10,000 – 20,000 |
|
Lawyers** |
4,000 – 6,000 |
8,000 – 20,000 |
|
Architects |
4,000 - 6,000 |
8,000 – 15,000 |
|
Secretaries
(Hebrew/English) |
4,000 – 5,000 |
5,500 – 6,500 |
|
Pharmacists |
5,000 – 8,000 |
8,000 – 15,000 |
|
Teachers (university) |
6,000 - 8,000 |
10,000 – 15,000 |
|
Teachers (high school) |
4,000 – 5,000 |
7,000 – 8,000 |
|
Teachers (grade school) |
3,000 – 4,000 |
5,000 – 6,000 |
* Based on income information
used for tax filing purposes. Includes the value of company cars, but does not
include the value of employee contributions to savings plans (explained in
Monthly Pay Slip below)
** An “apprenticeship” at
low salary is needed in order to receive full professional certification.
Salary levels for middle and senior management
in these professions are higher than for experienced professionals, and it is
difficult to fix an upper limit on management salaries.
Certainly, salaries of 40,000 shekels per month are not unheard of.
The
salary levels listed above are for people who have full Hebrew language skills
and for experienced professionals, the intent is for those with experience in
Monthly
Pay Slip – A monthly pay slip in
The salary slip is
generally divided into two parts, gross pay you received, and deductions from
pay. Gross pay less deductions equals net salary received.
The following is a brief
summary of potential data on a salary slip (not every employer pays all of the
categories of gross pay):
|
Category |
Sub-category |
Explanation |
|
Gross Pay |
Base
Salary |
Everyone
gets this |
|
Overtime Pay |
Hours
multiplied by hourly overtime rate |
|
|
Experience
Premium |
Addition
of 1% per year of experience |
|
|
Month
13 salary |
Since
there are 52 weeks per year, but only 12 months, some employers pay a 13th
month salary |
|
|
Vacation pay |
By law,
employees are entitled to a salary addition for at least one week of
vacations. This payment is over 1,000 shekels and depending upon the
employer’s generosity, can reach at least 5 times this amount. The
amount is either paid in full at the
beginning of the summer or divided into 12 monthly payments |
|
|
Public
Transportation Allowance |
Covers
the cost of traveling to work by public transportation. By law, a public
transportation allowance must be paid unless this cost is expressly dealt
with in the framework of base salary, or in the form of a car allowance |
|
|
Car
allowance |
Allocation
per kilometer multiplied by cost of operating vehicle per kilometer traveled |
|
|
Deductions |
Income
Tax |
The
more you earn, the more you pay (see Table below) |
|
National
Insurance |
About
5% of gross pay. Insurance for unemployment, disability, retirement |
|
|
Health
Insurance |
About
5% of gross pay. Insurance for doctors visits, operations, including
childbirth |
|
|
Pension* |
About 7%
of worker’s base salary (the employer contributes too). Provides for monthly
pension upon retirement |
|
|
Kupat Gemel** |
5% of
worker salary (the employer contributes too). Sometimes paid on non-base
salary as an addition to pension, and sometimes on whole salary. Funds a
one-time lump sum payment upon retirement. |
|
|
Manager
Insurance (generic term – not limited to managers)** |
5% of
worker salary (the employer contributes too). Generally paid on base salary
only. Funds a one-time lump sum payment plus disability insurance. |
|
|
Keren Hishtalmut** |
2.5% of
worker salary (the employer contributes 5% or 7.5%). Generally paid on base
salary only. Funds a one-time payment every 6 years, which may in theory be
for education, but in practice may be used however the worker chooses |
|
|
Union
Fee |
1% of
base salary, when a union exists |
* As of 2009,
by law employers must have a pension plan
* These deductions are
considered optional worker benefits. Some employers give them to all workers,
some employers give them to some workers and not others, and unfortunately,
some places of employment won’t offer them at all.
Given
that money set aside for pension and manager insurance is usually paid only on
base salary, it is important to structure your salary so that your base salary
represents a high proportion of total salary.
One benefit that all workers
are entitled to without deduction from pay is “Pitzuim”
(separation pay). The employer sets aside 8.3% of the base salary (one month
per year), which is paid to the employee if he is laid off.
Calculating
Income Tax – As in your country of origin, income tax is
calculated according to marginal tax rates and deductions from
tax owed.
The following is a table
of marginal tax rates for 2010:
|
Monthly Salary (in
shekels) |
Marginal Tax Rate |
|
The first 4,470 |
10% |
|
4,471 to 8,470 (the next
3,700) |
14% |
|
8,471 to 12,720 (the
next 4,250) |
23% |
|
12,721 to 18,250 (the
next 5,530) |
30% |
|
18,251 to 39,340 (the
next 21,090) |
33% |
|
Above 39,340 |
45% |
The
primary deduction from tax is tax credit points. Each point is worth 205
shekels. Tax credit points are allocated as follows:
|
Category |
Points |
|
Male Resident of |
2.25 |
|
Working woman without
children |
2.75 |
|
New Immigrants |
3 extra points - first
18 months in |
|
Working woman with
children |
2.75 points plus one
extra point per child |
The
following is a short, simplified example of a pay slip for a married man who is
a new immigrant:
|
Line Item |
Amount |
|
Base Salary |
9,000 |
|
Overtime |
1,000 |
|
Total Salary |
10,000 |
|
Less: |
|
|
Income Tax (based upon
marginal tax rates and 3 extra tax credit points) |
270 |
|
National Insurance |
500 |
|
Health Insurance |
500 |
|
Total Deductions |
1,270 |
|
Equals: |
|
|
Net Salary |
8,730 |
* For simplicity, it is
assumed that there are no employee deductions for
Pension, Kupat
Gemel, Manager Insurance and Keren
Hishtalmut.
Job Offer Pitfalls
1. Total
Salary versus Net Salary – Some employers will make you an offer of Total
Salary, which is prior to total deductions, and others will cite a Net Salary
figure, which is after total deductions.
Recommendation: Since the size of deductions for Pension,
Kupat Gemel, Manager
Insurance and Keren Hishtalmut
are related to
gross salary, have th employer cite you offers for
Total Salary and Net Salary.
2. Optional worker benefits – some
employers will start putting aside money for Pension, Kupat Gemel, Manager Insurance
and Keren Hishtalmut from
the beginning of your employment, others will start them only after completion
of a trial period, and others will not offer them at all.
Recommendation: Since employer
payments can amount to over 10% of total salary, be sure to understand whether
they are included and under what conditions.
3.
Annual Pay versus Monthly Pay – some
employers will quote an a monthly wage that includes
the proportionate monthly amount (1/12) of one time or periodic payments for
month 13 salary and of vacation pay. This provides the illusion of a higher
salary than you will receive on a month-to-month basis.
Recommendation: Ask whether the monthly salary offer factors in
these payments.
4. Vacation
and Sick Leave – by law, your employer is obligated to give you 10 vacation
days per year, and need not pay you if you are out of work for less than 3
days. Many employers are much more generous, and will give at least 20 vacation
days per year, and pay you if you are out of work for 1 day.
Recommendation: Ask what the employer provides.
Miscellaneous
Basic Training and Reserve Duty – If you are called to
serve, you will be paid either by National Insurance, or directly by your
employer, who will then get refunded by National Insurance.
Job Sources and Contacts
·
Nefesh B’Nefesh provides a network
of contacts and job placement assistance.
·
Networking with friends and neighbors
·
Tehillah and the Association of Americans and Canadians in
Israel (AACI) provide employment counseling and maintain data banks of
available positions that were sent to their offices.
·
Newspapers, both the Jerusalem Post and the
Hebrew papers, advertise available jobs, particularly on Fridays.
·
Various internet groups for professionals
Telecommuting with your pre-Aliyah
Job
This
option appears to have spread among immigrants who liked their pre-Aliyah job, and whose work does not involve direct daily
contact with other employees. If you think this is a potential option, check
with your pre-Aliyah employer before you move to
Setting up a Business in
Despite
objective difficulties with language, lack of familiarities with the system and
with the market for the good or service to be provided, some new Olim decide that working on their own beats working for
others.
However,
we caution new immigrants from exploring this option before you have mastered
the language, know the system (including reporting to the Income Tax Authority
(“Mas Hachnasah’) and the
Social Insurance Institute (“Bituach Leumi’), and have researched the outlook for the service
you wish to provide. Running a new business in
Job Stability versus
Potential for Improved Compensation
As in seeking employment
in the
Let’s define terms:
Job
Stability – the chance of achieving long-term employment
without fear of layoffs due to efficiency measures or of business closure.
Potential for Improved
Compensation – the opportunity to improve your
compensation package over time. This opportunity depends on the financial
health of the employer and the extent to which the employer is geared to
promote professional advancement.
In general, employment
opportunities in which both job stability and the potential for improved
compensation are high are fairly limited. In many cases, there exists an inverse
relationship between the two.
However, in
L=low, M=medium, H=High
|
|
Chance for Improved
Compensation |
|||
|
L |
M |
H |
||
|
Job Stability |
L |
Small businesses |
|
Start-ups |
|
M |
|
Non-bank financial,
academia |
Large Israeli owed
companies, |
|
|
H |
government |
|
Subsidiaries of foreign
companies, banks |
|
From this diagram, it can
be seen that:
1.
Small
businesses (private stores or companies with only a few employees) tend to
offer limited job stability and limited opportunity for improved compensation.
2.
At the other end of the scale, Israeli
subsidiaries of foreign companies and commercial banks tend to be stable
employers who also offer good opportunities for professional advancement and as
a result, increased compensation.
3.
As in
other countries, Israeli start-ups tend to be risky but offer potential for
compensation growth (assuming the company stays viable long enough).
4.
Government
(both national and local) tends to be a stable employer with relatively limited
opportunities for improved compensation. However, government jobs sometimes
provide a good starting point for obtaining initial
Tax
Issues in
Beyond an understanding of
how various taxes are calculated (see Monthly Pay Slip and Calculating Income
Tax above), the following are several tax issues that you should be aware of:
1.
First
year in
· You were
likely taxed in your pre-Aliyah nation based upon
earning a monthly salary for a 12 month calendar year. Even if
· If you work in
Be aware: Even though the
professional person who hired knows that you are a new Oleh,
chances are that he/she will not realize that there are tax implications and
won’t notify the payroll department.
If you don’t get income
tax reduced during the year, you can file a short form with the Income Tax
Authority and receive a tax refund after the year is over.
2. American
Citizens in
Aside from being a good
citizen, in the 2001 – 2010 period there is a less
altruistic reason to file:
Families with children age
16 and under are entitled to substantial tax credits for each of these
children. For example, if a U.S. family living and working in Israel shows that
its Israeli income tax is higher than the income tax it would have paid on that
income in America, which is usually the case, its tax obligation to the
Internal Revenue Service is zero, and in addition it is entitled to a refund of
$1,000 per child age 16 and under.
There are cases where the
childcare credit may not lead to a refund:
· Self employed workers who owe
social security tax – the credit will only partially offset social security tax
· The family has substantial
taxable income on interest and dividend income from
Foreign
filers who elect to take the child care credit must commit to filing this way
for a 5 year period. If you will only have children under age 17
for a year or two, this method may not be worth the trouble. As this is
written, the child care credit has yet to be renewed beyond 2010,
Nevertheless, for families
with several children in this category, serious money is involved. The
procedure for filing is somewhat complicated and it is advised to employ the
services of a competent accountant who is familiar with
Leaving
Work and Layoffs
Almost no one spends their
entire work life in
Pitzuim – Separation
pay. If you are fired, by law you are entitled to one month per year separation
pay for every year you worked. Some places may give more. If you quit a job
voluntarily, some employers pay Pitzuim, even though
the law does not mandate it.
Taxes of Separation pay: An exemption from taxes exists
on approximately the first 10,000 shekels per year. For example, if you work 5
years at a monthly salary of 7,000 shekels per month, and are paid for 5
months, all 35,000 shekels are tax free. If you work for 5 years at a monthly
salary of 12,000 shekels per month, the first 50,000 shekels (10,000 times 5
years) of the 60,000 is tax free, and the remaining 10,000 is taxed at the
workers marginal tax rate.
The following are payments
which employer may pay in certain situations:
Maanak Peraydah– a one-
time payment for leaving, above and
beyond Pitzuim. Dmai Histaglut – adjustment pay,
usually amounting to several months of extra salary.
Once you have left the
job, you are entitled to:
Dmai Avtalah - unemployment compnesation,
paid through the National Insurance Institute (Bituach
Leumi). To obtain this benefit, you should obtain a
letter from your former employer indicating that your employment ended as of a
particular date, and bring it the National Insurance Institute, together with
pay slips from that job. You will receive a percentage of your average salary
for a period not exceeding 175 work days, and perhaps less depending upon age
and family situation.