Taking ‘start-up nation’ to the next level

The pre-tax average monthly salary of a programmer at the end of 2015 was heading for NIS 25,000.

By ILAN EVYATAR
The Flux team, a company which manufactures a hi-tech hydroponic growing system. (photo credit: DANA MEIRSON)
The Flux team, a company which manufactures a hi-tech hydroponic growing system.
(photo credit: DANA MEIRSON)
It’s official: Israel’s hi-tech engine is slowing down, or at least not steaming down the tracks as fast as it can, and one of the main factors holding back the sector is a lack of skilled manpower, according to a report issued last week by the Finance Ministry.
Listen to the radio in the morning rush hour and you would have known that anyway. Companies are advertising aggressively in the search for talent. But that comes at a cost: tech sector employees currently have the upper hand and wages are spiraling. The pre-tax average monthly salary of a programmer at the end of 2015 was heading for NIS 25,000 and together with the strong shekel, high wages are hitting competitiveness. Jobs are being lost overseas because there aren’t enough programmers to fill the vacancies.
The situation is only likely to get worse. As many as 10,000 engineering positions are vacant in Israel’s advanced technology industries and that figure is growing by some 3,500 a year with only around 4,500 Israelis graduating from relevant degree programs.
Chaim Giron, CEO of Infinity Labs R&D, a company that runs a program training people without engineering degrees to do engineering jobs, tells me the shortage of skilled personnel is a threat to the stability of the industry.
Multinationals with R&D centers in Israel can’t set up new projects because they lack skilled hands, says Giron, who explains that startups with billions of dollars in venture capital funds are pulling in all the talent. If there were more skilled personnel available, he says, then a lot more projects could be taken on and that means more high-paid jobs.
How did that shortage come about? One factor is a precipitous drop in math and science graduates at the same time as the sector grew at break-neck pace, another is that the boon provided by the big wave of Soviet immigration to Israel in the 1980s and 1990s is over.
How do you solve that problem? “You have the bandage, and you have the root canal,” says Giron.
The bandage is short-term steps to fill the void such as programs to bring in qualified personnel from the Arab sector – which is massively underemployed in hi-tech and the sciences – and programs to train the ultra-Orthodox to work in the field.
The root canal is educating the younger generation, starting with kids who are in elementary school today.
So are the right steps being taken today to bridge the shortfall? Giron is confident that in 10 years’ time not only will the problem have been solved, but the sector will have taken a quantum leap.
Is that confidence justified? The problem after all is hardly new.
In 2012, the National Economic Council issued a report predicting an even greater shortfall than the one that exists today and formulating policy recommendations to rectify the situation.
The battle it seems is now turning.
After a 35 percent drop from 13,000 to 8,500 high school students taking advanced math, the decline seems to have been nipped thanks to reforms commenced by the previous education minister Shai Piron and a “Revolution in Math Education” introduced by the current minister Naftali Bennett, a former entrepreneur who sold his software company for $145 million, who hopes to drive the numbers above their previous highs.
Israel Advanced Technology Industries, an umbrella organization that promotes Israel’s hi-tech and life-sciences sector, is co-leading with the Rashi Foundation and the ministry a push to double the number of hi-tech workers by 2025 to close to half a million and between 20% to 25% of the workforce.
Last year the IATI began a program to expose kids from as young as 3rd grade to programming. Its success has been phenomenal. In 2015, some 60,000 elementary school pupils took part in a coding game and this year the number has jumped to 270,000. A cyber olympics for 11th and 12th graders attracted 3,000 students last year and 10,000 this year.
IATI CEO Karin Mayer Rubinstein says she hopes programs like the coding games and the cyber olympics will lead more kids to study sciences at school, to serve in technology units in the army and to go on study STEM subjects at university.
Success is imperative. Israel’s ability to remain an innovative “startup nation” depends on it.