Salary increases, bonuses and incentives: thousands of employees in Israel are gaining big
After decades, the Ministry of Defense is changing its compensation system: employees will receive fixed salary increases, excellence bonuses, and new incentives, with some of the additions also being recognized for pension purposes.
A new collective agreement was signed at the Ministry of Defense, following prolonged negotiations between the Histadrut, the Ministry of Finance, the Ministry of Defense, and employee representatives. The agreement, which will be in effect until August 31, 2030, changes the compensation model for ministry employees and replaces the incentive pay mechanism, known as "premiums," which had been in use for decades.
Instead of this mechanism, a model will be introduced that includes fixed salary increases recognized for social rights and pension, alongside attendance incentives, excellence bonuses, and target and output bonuses for students. According to the agreement, the changes are intended to adapt the salary structure to the characteristics of work at the Ministry of Defense today.
One of the central components of the agreement is a new percentage salary increase, replacing the fixed premium. Administrative, academic (MAHAR), engineering, and technical staff will receive a fixed salary increase of 14.3%. Social workers will receive a salary increase ranging from 10.73% to 15%, depending on their rank. In addition, annual excellence bonuses were set for 25% of employees each year, in eligible ranks, in the amount of thousands of shekels. The agreement also includes a shekel-based increase for senior staff in ranks 42–44 and above, as well as a monthly incentive for non-absence due to illness.
The agreement also regulates the compensation mechanism for students employed at the Ministry of Defense. Within its framework, target and output bonuses in the amount of thousands of shekels were set. The Treasury noted that the agreement cancels the incentive pay in the ministry, among other things due to the ongoing difficulty in adapting and updating it, an issue that the State Comptroller also pointed out.
Efi Malkin, the Commissioner of Wages at the Ministry of Finance, said:
"The agreement cancels the incentive pay in the ministry in light of the ongoing difficulty in adapting and updating it, a difficulty that the State Comptroller also pointed out."
According to him, the agreement includes additions to the base salary, a non-absence incentive, and excellence bonuses that will be distributed to 25% of employees in eligible ranks, in accordance with the management's decision. He also noted that the agreement regulates the salaries of senior employees and sets output and target bonuses for students.
Histadrut Chairman Arnon Bar-David said following the signing of the agreement: "The employees of the Ministry of Defense stand at the forefront of national action and carry the resilience of the state on their shoulders. The agreement signed does historical justice. We have eliminated expired compensation methods and created a stable, advanced, and fair model that ensures the pension future of the employees."
Ministry of Defense Director General, Major General (res.) Amir Baram, said that the agreement is part of realizing the goal set in the Ministry of Defense's strategy to empower human capital in the ministry. "After decades, we are replacing outdated salary mechanisms with a stable, fair, advanced, and modern model," said Baram. According to him, the agreement creates a connection between contribution, performance, and reward, alongside economic security and pension certainty.
Dani Hornstein, Chairman of the Histadrut of Engineers and Technicians and holder of the defense portfolio in the Histadrut, said that the agreement "replaces fragile premiums with solid and pension-protected salary components." The Ministry of Defense Workers' Committee also welcomed the agreement. Sasson Peretz, the committee chairman, said: "This is a festive day and a defining moment for all of us."
