Food mogul gives up bonus for staff

Rags to riches tycoon literally puts his money where the mouths are


By Nathan Jeffay, October 11, 2011
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Rami Levy in front of one of his eponymous supermarkets

Rami Levy in front of one of his eponymous supermarkets

An Israeli supermarket mogul has said that he will refuse his next bonus, forecast at around 1.75 million shekels (£300,000), and insist that it is given to his staff.

Rami Levy belongs to Israel's business elite which is receiving strong criticism from the country's cost-of-living protests. But unlike most other tycoons, Mr Levy has decided that the protesters are right.

The price of basic goods in Israel is so out of sync with salaries that the economic situation is "just not realistic," he said in an interview, adding that when the protests were at their height he had visited the "tent cities" and sent food there.

Mr Levy, owner of the eponymous discount supermarket chain, receives four per cent of the company's profits in bonuses. The payment for the September to December period will go to his lowest-paid 780 employees who are married, the marriage criterion being applied because couples have higher living costs than single people.

"I wanted to provide an example to a lot of people in Israel," Mr Levy said. He wants to see a change in culture among his fellow tycoons, with them adjusting their priorities to reduce profit margins and pay more attention to workers' benefits.

It's not just business, it's ideology

But he also hopes that his gesture will make an impression within Israel's public sector. With its high salaries and attractive perks for top officials, he thinks that the culture of the public sector is part of the problem. "The private sector took its example from the public sector, and it was a bad example," he said.

Mr Levy, 56, grew up with his five siblings in a one-room tin shack in Jerusalem, and in his early 20s set up a market stall in the city's Mahane Yehuda market. In the 19 years since he opened his first supermarket, the charismatic entrepreneur has become as well known in Israel as Richard Branson in the UK.

He introduced the loss leader to the Israeli market, with giveaways like a chicken for a shekel. And he is famous for his sudden generous gestures. On occasion he is said to approach families in a store and tell them their shopping will be free. And after terrorists murdered five members of the Fogel family in March, he went daily to the shivah to stock up the fridge and cupboards - and said that he would keep the family fed until the youngest orphan turns 18.

Mr Levy's company is highly successful. It has 21 supermarkets, and has recently branched out in to clothing and mobile phones. With new stores opening every year profits are constantly on the increase - the company's gross profits stood at £67.5 million in 2010, up 27 per cent on the year before.

But despite his success, Mr Levy claims that he is on the same page as the protesters. A report published on Sunday in the economic newspaper The Marker suggests that supermarkets like Mr Levy's bring down prices across the board, as in outlying areas where one store - Shufersal - has a corner on the market, it charges almost a third more for some items than it does where there is competition. "My stores are not only about business, but about my ideology," he said.

    Last updated: 11:34am, October 11 2011