The "tip law" that cut, sometimes up to half, the net wages of the restaurant servers took effect a year ago and has already caused harm to the sector. Waitressing was, until the "tip law," the preferred job for students and freshly released soldiers. The work was flexible enough and financially attractive because of the tips.
The food service workers were paid hourly minimum wage and allowed to keep the tips paid in cash at the end of the shift. A good waiter in a popular restaurant could easily quadruple its hourly wage in tips. The market worked well because it gave the right incentives, the servers maximized their tips by working for the best restaurant and delivering quality service. Restaurant competed for good waiters to provide a valuable experience for their customers.
All worked well until a year ago when the Regulator decided that taxes along with social security, retirement benefit, and other government-mandated contributions will be substrated from the tip money, now collected by the employer at the end of the shift. The result: it reduced by half the number of shekels taken home by workers.
The defenders of the law claim that now the waiters/esses are more protected, they are entitled to better retirement benefits. But young people working for a few years in waitressing aren't looking for a sound retirement plan or other social benefits, they want their current net salary to be high enough to cover their expenses at the start of their productive lives.
For many, waitressing isn't a viable option for temporary and flexible employment anymore, and fewer take this job. A smaller labor market makes it more difficult for restaurant owners to find good servers. Some restaurants are looking towards more self-service options, and others are cutting the number of workers by shift, lowering the overall quality of the "dining out" experience for the customers.
The tip law only benefited the government at the expense of the workers, the business owners, and the customers. For a country that wants to develop its tourism industry and improve its quality of service, the "Tip Law" is unfortunate and should be reverted before it does more harm.
A short documentary released by Channel 11 in Hebrew inspired this post.