War in Gaza and Israeli high-tech crisis with major drop in output and jobs
The latest figures released by the Israel Innovation Authority (IIA) show a grim picture for 2024. Since the Gaza War started, more than 8,000 high-tech workers have relocated abroad. IAA boss calls for "immediate attention" for the sector. Meanwhile, Prime Minister Netanyahu goes to Washington to meet Trump to discuss tariffs and hostages in Gaza.
Jerusalem (AsiaNews) – The war in Gaza could negatively impact Israel’s technology industry, one of the country’s leading sectors, as evinced by the latest employment data released over the weekend by the Israel Innovation Authority (IIA).
The report shows that 2024 will be the first in over a decade with job losses, after a period of stagnation that started in 2022. Last year, the number of jobs in high-tech dropped by about 5,000 to about 391,000, for a 1.2 per cent decline. If the start of the Gaza War is considered, jobs losses between October 2023 and July 2024 numbered about 8,300 or 2.1 per cent.
By comparison, the percentage of high-tech jobs in the total workforce remained broadly unchanged, about 11.4 per cent, after more than a decade of steady growth from 2012 to 2022.
“At a period where we’re facing security, political, and economic challenges, the data points to challenges that require immediate attention,” said IIA CEO Dror Bin. The sector faces “stagnation in employment, a change in the mix of positions, and an increase in the volume of relocation.”
For Bin, “To ensure the future of Israeli high-tech, a combined effort of the government and industry is required – investment in human capital, improving skills, returning employees who left Israel, and expanding business activities here in Israel."
Stagnation is not uniform across all sectors. While overall employment has declined, jobs in research and development (R&D) have grown, accounting for more than half of all high-tech employees by 2024. By contrast, headquarters and product-related roles continued to shrink.
A particularly surprising fact is the geographical distribution of employees. Israeli private high-tech companies now employ nearly half of their R&D personnel abroad, despite Israel's advantage in the field.
In addition, around 75 per cent of business operations staff—such as sales, marketing, and customer support—are also based abroad. Overall, R&D and business operations account for about 80 per cent of total employment of these companies.
The figures underline a trend towards global dispersion. In 2023 alone, private Israeli high-tech companies hired about 4,500 R&D professionals abroad and over 2,000 employees in business operations.
The report also shows a notable shift in the composition of the high-tech workforce: the R&D share is up from 37 per cent in 2012 to around 50 per cent in 2024.
While the number of headquarters and product employees increased by 44 per cent over the same period, their relative share fell, a sign that growth in the sector is concentrated in highly technical roles, requiring advanced education and skills.
The upshot is that the wage gap between high-tech workers and the wider economy has continued to widen. In 2024, the average monthly wage in high-tech was 32,300 NIS (Israeli New Shekel, around US$ 8,500), about 2.8 times the national average. This is largely due to the increasing concentration of high-paying R&D roles and the decline of administrative or headquarters positions.
Of the approximately 390,000 high-tech workers in Israel, about 250,000 are employed by Israeli high-tech companies, both private and public, while about 90,000 work for multinational companies. Another 50,000 are employed in IT services and technology support roles.
Meanwhile, Israeli Prime Minister Benyamin Netanyahu arrived in Washington yesterday where he will meet US President Donald Trump and top administration officials for a hastily organised summit to talk about Gaza, hostages (59 still in the hands of Hamas) and tariffs (at 17 per cent).
The Prime Minister’s Office announced a heavy agenda with focus on “Israel-Turkey relations, the Iranian threat and confronting the International Criminal Court”.
Netanyahu left for Washington from Budapest, yesterday, where he was on an official visit, less than 24 hours after the announcement of the trip itself and after a three-way conversation last week between Netanyahu, Trump and Hungarian Prime Minister Viktor Orban.
On the way to the United States from Hungary, the prime minister’s plane, the Wing of Zion, extended the route by 400 km, flying over Croatia, Italy and France, to avoid the Netherlands, Ireland and Iceland where Netanyahu might be arrested in the event of an emergency landing.
In Washington, one of the crucial issues on the agenda, in addition to the hostage issue, will be new tariffs imposed by Trump that sunk stock exchanges and global markets.
If applied, particularly in the pharmaceutical and chip sectors that had been hitherto spared, tariffs could cause serious damage to Israeli exports, which are worth US$ 3 billion.
The areas expected to be hardest hit are high-tech, including biotech, plastics, metals, chemicals and fuels, robotics, and electronic components.
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