Pay and work hours in the Public Service

When public services operate at their best, they strengthen economic growth and productivity, cushion communities during national crises, and foster public trust in democratic institutions. High-quality public services depend on a skilled, motivated, and fairly compensated workforce. Ultimately, high-quality public service delivery depends on the ability to attract and retain skilled workers through competitive pay, manageable working hours, safe working conditions, meaningful career opportunities, and the dignity they deserve. Strong labour institutions and social dialogue are essential to achieving these economic and social outcomes. However, decades of fiscal austerity and real-wage suppression have created severe staffing shortages across Israel’s public sector, threatening worker well-being and service accessibility.

This challenge is especially acute in Israel. The average Israeli employee logs over 2,000 working hours annually—equivalent to an extra month of work compared to the OECD average and nearly 300 hours more than in peer nations like Denmark, Sweden, and the Netherlands. Israel also ranks at the bottom of the OECD for annual leave. But the long working hours in Israel have not translated into higher productivity. Despite working substantially longer hours, Israel’s hourly labour productivity remains well below the OECD average, demonstrating that productivity depends more on the quality of work organisation, skills, and investment than on the number of hours worked. Crucially, long hours disproportionately suppress women’s employment, deepening gender gaps.

Addressing this deficit is an active strategy already producing measurable results. To narrow the OECD gap, the Histadrut signed a landmark framework agreement in the summer of 2023, reducing the public-sector workweek from 42 to 40 hours, phased in across over 400,000 workers, without any reduction in pay. Today, the Public Sector workweek is set at 40 hours. It has already shown impressive outcomes, with roughly 35% of surveyed public sector workers reporting increased personal productivity, alongside marked drops in burnout and gains in work-life balance. But there is more we can do to achieve good standing in the OECD comparison.

Shorter hours must be paired with fair, transparent payment structures. For too long, workers have been trapped in salary structures that predate the Minimum Wage Law, in which stagnant base pay is offset by “salary supplements” that are either fully or partially swallowed to meet the legal minimum. When they are entitled to new salary supplements or when the minimum wage goes up, those workers are left with no real raise. The Histadrut is working to reform salary structures by ensuring that basic rates reflect the skills and knowledge required of workers, that supplements are paid on top of basic rates, that workers are fully compensated for professional development and years of public service, and that high-performing departments or individuals earn the goal-based bonuses they deserve.

Israel also faces one of the largest pay gaps between public- and private-sector employees among OECD countries, making recruitment and retention increasingly difficult across essential public services. Reducing working time and reforming pay structures can make a substantial contribution to addressing staffing shortages, improving recruitment and retention, and strengthening the quality and resilience of public services.