Israeli women’s salaries plummet by 30% after birth of first child, Finance Ministry study show

Read More

The “motherhood penalty” in Israel, a term describing the reduction in women’s salaries after the birth of their first child, reaches 28 percent in Israel, according to a new study by the Chief Economist Division in the Finance Ministry.

The figures indicate that even a partial closing of the gender gap in Israel by 40 percent would increase Israel’s GDP by 91 billion shekels ($29 billion) a year by 2040.

The study deals with gaps between men and women in the job market. Israel has a high global ranking in its percentage of female employment, which in 2019 reached 73.9 percent compared to 81.6 percent for men – a gap of 7.7 percentage points. On the other hand, the gap in the average employment rate in the OECD is higher, at 13.3 percentage points.

However, when we examine the salary gaps we discover a less flattering picture for Israel. The average monthly salary for men in Israel is 16,100 shekels, compared to 10,700 for women. This gap is relatively high, and reached 22.7 percent, while in the OECD the average salary gap is only 12.4 percent. The salary gaps in Israel have narrowed since 1990, when they were 47 percent, but in the past decade there has been almost no change.

One of the causes contributing to the salary gaps, which the treasury estimates is responsible for half of the disparity, is the birth of the first child. After giving birth, women usually work fewer hours or choose to work only near their place of residence – a limitation that reduces employment opportunities – and their monthly salary drops.

In a previous study by the Chief Economist Division in 2019, it was also found that women drop out of the high-tech industry after giving birth to their first child, and their salary suffers in comparison to women in high-tech who aren’t mothers.

According to the Finance Ministry, the “motherhood penalty” in Israel (for Jewish women who are not ultra-Orthodox) reaches 28 percent after the birth of their first child, while for men the effect of parenthood is negligible.

Israeli economist proposes mandating paternity leave to close gender gaps

Unpaid COVID-19 leave in Israel hit women, Arabs, Haredim first

Israel might have the answer to the global birthrate crash

Following the birth of their first child, women are employed less, earn less and also work fewer hours. The treasury stresses that although it’s the mother’s free and rational choice to be with her children – in the final analysis, this situation affects gender inequality in the job market.

Budgeting daycare centers

In an international comparison, the “motherhood penalty” in Israel is relatively low. In Germany it is double, in Denmark – 21 percent, in the United States – 31 percent, and in Great Britain – 44 percent. The treasury estimates that the differences stem from the length of maternity leave in each country. The influence of the “motherhood penalty” is also related to the birthrate, which in Israel is significantly higher than that in European countries, sometimes double.

In Arab society, on the other hand, the salary gaps actually increase in the year of marriage – before the birth of the first child. The treasury explains that cultural differences impact female employment, and that in the Arab community the disparity stems from the fact that women stop working after marriage.

The research study did not include any reference to ultra-Orthodox women, with the explanation that “the motivations for employment are different, and women are employed at far higher rates than men.” According to the study, when it comes to the Haredi population, various government policies regarding the integration of Haredi women into the job market, such as promoting gender segregation in academia or in the job market, are likely to have implications for their employment.

According to the treasury, the findings of the study should emphasize the importance of closing gaps. The tools for doing so are taxation, budgetary transfers, maternity leave, and early childhood education. When it comes to increasing the employment rate among women – the most effective tool is budgeting daycare centers.

At the same time, in order to bring about a decline in the “motherhood penalty” over the long term, fathers should be encouraged to take a significant paternity leave, perhaps with flexible employment conditions – in other words, to work part-time.

Another frequently discussed step for increasing the rate of women’s employment and reducing the gender gap, is to adapt the vacation days in the school system to the work days in the economy as a whole.