Israeli labour market frozen by racial discrimination

Discrimination in Israel’s Labor Market

Ethiopian Immigrants, Arabs Paid Less for Same Job

By Linda Gradstein,  The Media Line

The gender gap in the U.S., in which women earn about 20 percent less than men for doing the same job, is well known. But a new study in Israel finds that native -born Israelis enjoy wages significantly higher than Ethiopian immigrants or Arab citizens of Israel. In many cases, the wage gap even widens over time.

The study, conducted by economists at the College of Management Academic Studies in Rishon Letzion, looked at the average wage of 500,000 Israelis with university degrees. It found that native-born Israelis in “high-paying professions” such as law, engineering and high-tech made 41 percent more during their first year of employment, and 64 percent more after 10 years. In “low-paying professions” such as social work and education, the wage gap was less: 20 percent the first year, decreasing to 15 percent after 10 years.

One surprising finding is that Jews who immigrated from the former Soviet Union (FSU) have almost the same salaries as native-born Israelis, even though they came as immigrants.

“Russian immigrants have a lot of motivation and a lot of ambition,” Erez Siniver, one of the report’s authors, told The Media Line. “They also have a large network they can call on.”

In the 1990s one million immigrants from the FSU, many of them highly educated, came to Israel. They learned Hebrew quickly and have successfully integrated into Israeli society. Ethiopian immigrants, however, have had a much more difficult time. Many of them came from underdeveloped rural areas and did not have access to good education. Today there are about 120,000 Ethiopian immigrants in Israel, many of whom complain of discrimination.

“Every society is characterized by hidden or overt prejudices,” academic and social activist Prof. Yossi Yonah of Ben-Gurion University’s Department of Education told The Media Line. “There are racial stereotypes and exclusionary practices in the Israeli job market.”

Yonah, who is also running as a candidate for parliament with the Labor Party in next month’s election, says that the wage gap is harming Israel and its productivity, as well as those who are discriminated against.

The situation is even worse among Arab citizens of Israel. An estimated 40 percent of university graduates are unable to find work in their fields, leaving them either unemployed or overqualified.

“I wasn’t surprised by the results, but rather by the extent of the wage gap,” Siniver said. “We have to make people understand that Arabs and Ethiopians can be promoted.”

He said that discrimination on the basis of gender or ethnicity is illegal – as it is in the U.S. ­– but is difficult to prove.

The study also found that more than half of native-born Israelis and immigrants from the FSU study to enter the higher paying professions, while just 29 percent of Arab citizens and 27 percent of Ethiopians choose to do so. That choice also affects average wage. The average starting wage for university-trained Ethiopians is $1,430, 27 percent less than native-born Israelis and immigrants from the FSU. After 10 years, the gap grows to 36 percent.

Yonah says it is especially egregious that these gaps exist in Israel, since Jews have often been victims of discrimination.

“We are bogged down with our own perception of being a perennial victim of such practices,” he said. “It is time for us to reckon with it. We are plagued by the same scourge of racism and discrimination, and we must do more not to let it become entrenched in our society.”

Study: Yawning wage gaps point to deep discrimination in Israel’s labor market

Study finds that Russian immigrants and native-born Israeli Jews earn more than Ethiopian immigrants and Israeli Arabs, by wide margins, in the same professions.

By Hila Weissberg, Ha’aretz
December 17, 2012

The Israeli job market suffers deep discrimination based on skin color and national origin. That is the conclusion of new research examining the average wage of university-educated workers over a decade.

The study found that native-born Israeli Jews enjoy the highest average wages across nearly every profession and wage level. Immigrants from the former Soviet Union are a close second. Far behind are Ethiopian immigrants and Israeli Arabs, according to the study.

Moreover, in many cases the wage gaps widen over time rather than narrow.

According to the study, which was conducted by economists at the College of Management Academic Studies, native-born Israeli Jews and FSU immigrants enjoy wages that are 41% higher on average than those of Ethiopians and Israeli Arabs during the first year of employment in professions where average salaries are high. After 10 years in the labor market, that gap widens to 64%.

“I expected to see a wage differential of 15% or 20%. I didn’t think I would find a gap of 60%. I didn’t imagine that the discrimination would be so huge,” said Erez Siniver, assistant dean in the college’s School of Economics, who led the study together with Dalit Gafni of the College of Management and Gil Epstein of Bar-Ilan University.

Israeli Arabs on average earn NIS 14,169 after 10 years on the job in higher-paying professions, while Ethiopian immigrants earn NIS 12,116 on average, the study found.

For lower-paying jobs, the gap between the populations is 20% in the first year of employment, narrowing to 15% after 10 years. In fact, FSU immigrants receive higher salaries on average than native-born Israeli Jews – NIS 6,172 a month on average in their first year and NIS 12,211 after 10 years, versus NIS 6,026 and NIS 11,844, respectively.

“If you see a gap of 40% in wages between two people who studied similar professions, there’s nothing more discriminatory than that,” said Siniver. “They enter the job market at lower wages because it’s hard for them to find work. They compromise on their threshold salary. We see the same phenomenon in the United States with Afro-Americans, who earn less than other population groups.”

The study surveyed the average wage of 500,000 people with university degrees between the years 1995 and 2008 among four different population groups. Using data from the Central Bureau of Statistics and the Israel Tax Authority, they tracked their wage histories from the time they took their first job after graduation till a decade later.

Among the professions that were tracked were low-wage positions such as social work, psychology, education and communications as well as higher-paying ones like law, engineering, economics, business management and computers.

By focusing on wage differential between immigrants from the FSU and Ethiopia, the research confirms the theory that discrimination in the labor market is, in fact, based on skin color and national origin. That provides a fairer basis of comparison, since both groups of immigrants enter the job market with the same disadvantages of not being native Hebrew speakers and having fewer personal connections to help them.

The research found that average wages for FSU immigrants are about the same as for native-born Israelis, and 35% higher than for Ethiopian immigrants in the first year of work. Ten years later, the gap between the two groups widens to 66%. In low-paid professions the gap narrows from 21% in year one to 15% in year 10, although FSU immigrants continue to be paid more.

FSU immigrants enjoy an average pay rise in the first year of 7.26%, which brings their cumulative pay increase to 101%. Native-born Israeli Jews enjoy wage rises on average of 6.53%, or a cumulative 88% over 10 years. By comparison, the average pay increase for Israeli Arabs over the decade is 5.42% annually, or a cumulative 70%. For Ethiopians it is 5.04%, or a total of 63.5%, the research found.

It also found that the choice of profession among FSU immigrants and native-born Israeli Jews is different from the other groups. More than half (52% and 54%, respectively ) of the two groups study to enter high-paying profession while among Israeli Arabs the rate is 29% and among Ethiopian immigrants 27%.

These choices, of course, have an impact on average wages for the four population groups. The average starting wage for university-trained Ethiopians is NIS 5,421 a month in the first year of employment – 27% less than for FSU immigrants and native-born Israelis. After 10 years, the gap overall grows to 36%, according to the research.