A "Cyber Horse", made from thousands of infected computer and cell phone bits, is displayed at the entrance to the annual Cyberweek conference at Tel Aviv University, Israel June 20, 2016..
(photo credit: REUTERS/AMIR COHEN)
Israel’s brightest brains are increasingly being driven abroad, spurred by flagging labor productivity and the high cost of living, a Shoresh Institution study published Thursday revealed.
As Israel’s labor productivity falls further behind leading developed countries; as the income tax burden is increasingly placed on educated parts of the population; and as living costs continue to rise far beyond other countries, Israel’s ability to retain its most skilled citizens is declining.
According to the study by Prof. Dan Ben-David, only a small sector of Israel’s population – under 130,000 Israelis – are keeping the economy, healthcare system and its academic bedrock among the leaders of the developed world. For example, just 2.7% of Israeli workers are employed in hi-tech manufacturing, but the industry accounts for 40.1% of Israel’s 2015 total exports.
“The fragile size of this group means that emigration by a critical mass out of the total – even if only numbering several tens of thousands – could generate catastrophic consequences for the entire country,” said Ben-David.
Giving cause for concern, Israel’s population increased by 24% between the decades 1995-2005 and 2006-2016, but the number of Israelis receiving American citizenship or Green Cards increased by 32% during the same period.
The study also revealed that for every Israeli with an academic degree who returned to Israel from abroad in 2014, 2.6 Israeli academics emigrated. This increased to 4.5 emigrants per returnee by 2017.
The total number of Israelis practicing medicine in other OECD countries in 2006 was 9.8% of all Israeli physicians. The total of physicians abroad increased to 14% by 2016.
Pushing educated Israelis to search for employment elsewhere is a combination of falling labor productivity, slipping further behind leading developed countries, and the country’s relatively high consumer prices.
Both Tel Aviv and Jerusalem feature among the five most expensive cities in the OECD to buy a home.
“While the overall emigration numbers are still relatively small when compared to Israel’s total population, the bite that they take out of the most educated segments of society – those that keep Israel a part of the developed world – is not inconsequential,” said Ben-David.
“In light of the breadth, depth and the direction of the emigration from Israel, a serious solution to the problem requires much more than the ineffectual symptomatic assistance at individual levels that has been implemented until now. A sharp pivot in national budgetary priorities is needed,” he said.
The Shoresh Institution’s findings also suggest that the better the institution of higher learning, the greater the emigration rate of its graduates.
Approximately 5% of graduates with degrees in sciences and engineering from non-research colleges have lived abroad for the past three or more years, compared to about 4% from social sciences and humanities fields. This figure, however, rises to 9.2% among sciences and engineering graduates from Israel’s top research institutions.
Demonstrating the impact of emigration on Israeli academia, the number of Israelis teaching at the economics and computer science departments of the top 40 American universities could fill almost two additional Israeli departments in each field.
In the case of the top American business schools, Israeli academics teaching there could fill nearly three-and-a-half Israeli business schools.
“The extent of emigration, the direction of the trend, and the direction that all of Israel – a country that needs to remain sufficiently attractive to those who are very sought after by other countries – is headed, should ring alarm bells in all of the corridors that determine Israel’s national priorities,” Ben-David said, issuing a warning to the next Israeli government.
Providing necessary tools, including education, and suitable conditions to much wider swaths of the population, he said, would enable Israel to bring down poverty rates and raise the country’s economic growth.
Including a larger share of Israel’s skilled population in the economy would lead to significantly steeper growth, and Israelis would increasingly remain at home and even start returning from abroad in greater numbers.