Sunday, 16 January 2011

The Pay Slip That Does Not Show All the Numbers

Israeli Prime Minister Benjamin Netanyahu has been waging a private battle at the Knesset to increase the prime ministerial salary. Raising the salaries of public servants is never easy, and there is probably never a "good" time to choose for this, when lawmakers and the general public will support such a move without reservation. Netanyahu's timing, and particularly his tactics, have proved to be quite interesting.

The current state of the economy shows that, despite attempts to cut public spending, the salary levels in the market are on the rise. During the economic downturn in 2008, many companies in the private sector opted to cut salaries instead of laying off staff. As a result of this, salary levels in the market decreased noticeably. Since then, salaries have returned to their former levels, and have even surpassed them. This is also reflected by an increase in the level of the minimum wage which was recently agreed by the Knesset for implementation in two stages. The minimum wage will be increased from its current level of NIS 3,850 per month to NIS 4,100 ($1,155 at current exchange rates) per month in July 2011, and then to NIS 4,300 per month in October 2012. This, it seems, has provided the prime minister with a perfect opportunity for him to request an increase to his pay packet as well.

As part of his PR campaign to convince the general public of the fact that he deserves a pay rise, Netanyahu has taken the unusual step of releasing a copy of his pay slip for public consumption. The details were released on Netanyahu's Facebook page, and they make quite interesting reading. The pay slip shows that Netanyahu earns a gross monthly salary of NIS 41,987 ($11,987), an amount which is set by law. This is well above Israel's mean salary of NIS 7,900, but not much for a senior CEO of a major Israeli company who is required to be on call 24/7. By the time Netanyahu has had deductions applied for income tax (he pays a huge NIS 11,500 in tax for use of his armoured car), national insurance and social security contributions, his take-home salary is a mere NIS 15,000 ($4,225) per month. By comparison to other world leaders (at least those whose pay packets are publicly disclosed), Netanyahu's salary is modest. President Barack Obama earns $400,000 a year and Singaporean Prime Minister Lee Hsien Loong earns more than $2.1m per year. It could be argued that Netanyahu has one of the more intensive jobs amongst his international peer group, justifying a salary that compares with those earning at the upper end of the salary range.

The pay slip, however, conceals more than it reveals. Netanyahu and members of his family have use of the prime minister's residence with its staff and perks. Almost all aspects of his private expenditure are covered by the state coffers. All of this means that he has little need for private cash of his own while safely ensconced in the prime minister's residence. Before assuming his role as prime minister, he will have been required to deposit all of his business dealings into an escrow arrangement. These would include the royalties being earned on the sales of the numerous books that he has written as well as other business dealings from his time prior to entering government. While he is not allowed to actively pursue his business interests while serving as head of government, these interests are undoubtedly continuing to earn income and gather value. By the time he leaves the government and retrieves these activities from the escrow arrangement, there will no doubt be a tidy pay-off awaiting him.

Being able to enter "Prime Minister of Israel" on his CV is helpful for securing Netanyahu's financial future. It can be expected that he will be in great demand on the lucrative speaking circuit, and will be able to command a sum for each speaking engagement that would probably dwarf his annual salary as prime minister. Not only would Netanyahu be the ex-prime minister of a country that is constantly in the headlines and attracting world attention, he is also personally a strong character and eloquent orator. I expect that he will have the pick of the speaking engagements, and will probably be able to name his price.

While it is expected that the prime minister should earn a living wage to ensure that he can get on with his job and not have to be concerned about his day-to-day financial affairs, it is also clear that people do not take on the prime minister's job in order to get rich. Or at least, not to get rich while in office. Whatever salary would be on offer, could not compensate the holder of the office for the intensity of the job and huge responsibility that comes with it. This reward comes via the international exposure gained, the satisfaction of leading a country and achieving its hopes and aspirations, and reaping the financial benefits that can be taken advantage of after leaving office.

If Netanyahu does succeed in engineering an increase to his prime ministerial salary, it is unlikely to make any real difference to his financial situation. He currently has little need for spare cash, and probably has enough from his personal resources to make good any shortfall. He could find, however, that the damage suffered by increased scrutiny and negative public opinion may be more than the financial benefit of the additional money earned. In the same way as many other Facebook users have found in the past, his Facebook disclosure may yet come back to haunt him.

1 comment:

Anonymous said...

While Bibi is trying to run a divided Israeli public at home and getting paid a pittance for it his opposite in the USA Obama earns eight times a month more in dollar equivalent ,plus the White House accommodation and the food drinks etc. that comes with it,the pet care ,two dogs paid for by the American taxpayer,the helicopter and security paid for by taxpayers and the rather ostentatious Boeing that transports all and sundry around the globe on the Obama family globetrotting extravaganza ,no comparison whatsoever to Bibi,s measly $ 4225 net salary per month ?