Hi-tech jobs are plentiful, but experts warn of a 'slowdown'

A new report from Start-Up Nation Policy Institute and the Israel Innovation Authority shows the latest Israeli tech human capital statistics.

A CYBER hotline facility, part of Israel’s hi-tech innovative sector (photo credit: REUTERS)
A CYBER hotline facility, part of Israel’s hi-tech innovative sector
(photo credit: REUTERS)

The Israeli hi-tech sector has been doing pretty well for itself. The year 2021 saw record-high investments in Israeli tech start-ups from VCs and investors around the world, and there doesn’t seem to be much indication of progress slowing down – save for the presence of one significant hurdle on the road to success: human capital.

As laid out in the newly released “Human Capital in Tech 2021-2022” report from the Start-Up Nation Policy Institute and the Israel Innovation Authority (IIA), there has been a fair amount of challenges for tech companies in regard to finding workers lately, but a fair amount of success, as well.

The Israeli hi-tech center is growing rapidly, which is creating more job openings. A survey conducted in March-May 2022 among Israeli companies reported around 33,000 open jobs in Israeli hi-tech. Many of the opportunities in the tech sector are non-tech-related jobs – it takes a whole village to keep a company running, and Israeli start-ups are looking for people to move in. According to the report, there was a 250% increase in openings for outside of technological positions, which make up about 31% of hi-tech industry jobs.

On the one hand, this is great for resolving unemployment: the past year had a 30% increase in the number of employees in Israeli growth companies, compared with a steady growth rate of only 5% in the development centers of multinational companies. More than half of the new positions within the industry have been filled by workers from outside the sector, such as academic graduates, entry-level employees and workers who transferred from positions in other sectors. If you’re a worker looking to break into the sector, the odds are in your favor.

On the other hand, however, human capital is a zero-sum game, and despite the presence of new job opportunities for non-tech folk, programmers are still in high demand. To that end, many companies with many job openings are faced with a dwindling pool of workers to hire.

 HI-TECH AND public service industries experienced minimal damage and were quick to recover from the initial blow of the pandemic. (credit: MIRIAM ALSTER/FLASH90) HI-TECH AND public service industries experienced minimal damage and were quick to recover from the initial blow of the pandemic. (credit: MIRIAM ALSTER/FLASH90)

“The Israeli and global shortage of manpower in tech fields is not only a tech-industry problem,” said Dror Bin, IIA’s CEO. “The shock waves going through the Israeli and global economy affect recruitment, but they don’t reduce the need for increased technologically competent manpower in all branches of the economy and the public sector.”

AS THE industry laps up the last dredges of talent available in the “traditional” human capital pool – which mainly consists of post-8200 Ashkenazi men – it has found the need to look elsewhere to satiate its constant hunger for more intelligent laborers.

As such, it has turned to hire from peripheral groups such as Arabs and ultra-Orthodox Jews, as well as women, from across the board. While it may seem odd to suggest the category “all women in Israel” is a peripheral group, statistics tell an unsettling truth: according to a survey of companies led by Ethosia, the percentage of women in R&D positions and R&D management was 17% and 21% respectively; and a report from Power In Diversity found that women only make up about 33% of the entire start-up workforce in Israel.

“The shockwaves going through the Israeli and global economy affect recruitment, but they don’t reduce the need for increased technologically competent manpower in all branches of the economy and the public sector”

Dror Bin

Despite this meager representation, evidence has emerged that hiring more women can come with a host of benefits. As stated in the report, an inverse correlation was found between percentage of women and rate of resignations: the higher the percentage of women in a company, the lower the turnover.

“Companies that have more women have much more stability,” said the head of IIA’s growth & strategy division, Sagi Dagan. “Women leave their jobs less.” He offered an explanation for the statistical findings, noting that if a company is more diverse (it’s ridiculous that the industry defines hiring people who make up 50% of the planet’s population as “diversification,” but here we are), then usually it’s a place that people are more satisfied working in, which would inspire more people – women included – to stick around.

Hi-tech growth

All that said, Israel’s hi-tech growth is fighting an uphill battle, as it – and the rest of the world – are faced with a looming economic recession as a result of inflation and geopolitics. “Probably we’re going into a recession, hopefully not a crisis,” said Uri Gabai, Start-Up Nation Policy Institute’s CEO. “The downside is once you get into such a slowdown after growth, you can expect many layoffs.”

“We must prepare ourselves for a rough period,” he continued. “Many companies now are saying, ‘Okay, I went through a hype period in 2021, and now things are looking slightly gloomy. I’m going to freeze all the recruiting processes and I’m unfortunately gonna part with many of my employees.’”

That said, Gabai concluded, a slight recession wouldn’t be the worst thing in the world, assuming it doesn’t get out of hand, in which case it would be “bad news for all of us,” as he put it. “We’ll need to see if it will bring some sanity to a sector that went slightly out of proportion, specifically in regards to salaries and company evaluations.”