Promoting hi-tech in the periphery

Incentives and rewards will be making the case for migration from the Center more attractive and compelling than ever

THE GAV-YAM Hi-Tech Park of Beersheba is a joint initiative of the city’s municipality and Ben-Gurion University of the Negev. (photo credit: screenshot)
THE GAV-YAM Hi-Tech Park of Beersheba is a joint initiative of the city’s municipality and Ben-Gurion University of the Negev.
(photo credit: screenshot)
‘The development of the hi-tech industry in the periphery is 20 years late, but we have to start somewhere. By the time a government ministry takes it upon itself, the saga of the elections cuts everything short,” says Avi Dabush, a Sderot resident and chairman of the periphery headquarters in Meretz. “It means a delay of a year to a year and a half at the very least.”
In November 2018, the Economy Ministry announced its flagship program for the promotion and development of hi-tech in the periphery. As part of the program, grants will be distributed to companies that open branches in peripheral cities and serve as employment anchors. In addition, the Israel Innovation Authority will offer NIS 240 million to hi-tech companies to open research and development centers in the periphery, and NIS 10m. for three years will be given to any company that conducts 80% of its operations and hires 60% of its employees in the periphery. At the same time, grants of NIS 30m. will be given to entrepreneurs who build rental buildings for the hi-tech industry in the periphery. More on the agenda: NIS 20m. for the construction of hi-tech buildings in the Arab sector.
“The situation in the periphery in terms of employment is very different from the Center,” says Dabush. “The average wage is half to two-thirds of the wage in the Center, depending on whether it’s in the Negev or the North, and unemployment is twice as high. When we are facing such unemployment levels and the danger of future layoffs in all kinds of factories, like in the Negev, for example, things have to change. The change will not be for those laid off but for the young generation to have an interest in remaining in the region.
“This is an example of an industry with a very high average wage and a career that can be a magnet for many talented young people who are currently studying at Ben-Gurion University. Instead of moving to the Center, they can stay. All these elections right now are actually postponing the government funds.”
“Today we know that two economies have been created in Israel: the hi-tech economy and the rest of the economy,” says Merav Kenan, CEO of the Israel Hi-Tech Association. “The hi-tech economy is very successful in Israel, but constitutes only 10% of the workforce. It still needs a lot more workers. As the industry grows, more manpower is required. Now we are talking about 10%, with most of the workers in the Center, so naturally there is no growth. It also greatly affects our ability to continue to thrive in the world. It’s a subject we’re working on.”
Where do you get this manpower from?
“You just have to expand to the periphery, make technology accessible there, from technology education to a situation where hi-tech companies open branches and centers in the periphery,” says Kenan. “This is something that will benefit both the residents in the periphery and the hi-tech situation in general.
“Today, for example, employees from Ashkelon have to travel to Tel Aviv in traffic jams to work in hi-tech. If there were hi-tech companies in the South, it would also boost the local economy and make people stay there.”
How far are we from the vision of bringing the Center to the periphery?
“It really is a vision that starts now. Hi-tech companies are already realizing the need to turn to the periphery, leave the Center, to increase staffing. There are hi-tech companies that have already opened centers in the periphery, all kinds of local start-up ventures. The technological colleges that are now in the periphery are also beginning to collaborate with the elite industry. Connect between colleges and hi-tech companies so that the graduates will be placed in these companies later.
“But we are still far from a massive, hi-tech transition to the periphery. This activity of the Economy Ministry is actually designed to give that push for these companies to move there.”
According to Kenan, “Government ministries continue to work, but the attention of ministers, who can leverage the activities, is naturally on preparation for the elections. Currently, there is activity mainly on the part of the Innovation Authority at the Economy Ministry, which today exposes hi-tech companies to the periphery and makes the connections. It holds conferences where companies present their activities, and on the other side engineers and hi-tech people who live in the area come as well. But, still, everything is on a small scale, because right now the focus is on the elections. As long as there is no new government, there won’t really be any progress.”
“Hi-tech is at the forefront in promoting positive immigration to and stopping negative emigration from the Negev and Galilee regions,” says Shir Hasfari, a city and real estate brander. “Regional councils and authorities in the periphery are first and foremost interested in providing employment to existing and new residents. The greater the amount of commercial areas and industries in the city, the richer the area will be, which would allow for a higher standard of living for residents. The most obvious example is Givatayim. Young couples are eager to live there, even though it is branded as a city for the elderly. Employment in hi-tech nearby makes it attractive.”
How urgent is it to develop hi-tech in the periphery?
“Employment in this field is very common among young people,” says Hasfari. “This will enable them to live in these areas and leverage the cities in the periphery. If the hi-tech companies choose to establish sites there, it will draw everyone in. It could also produce a very positive media resonance.
“Beyond that, today’s hi-tech industries provide a second home for employees: kindergartens, gyms, babysitting services. There is also the matter of tax benefits in the periphery. Hi-tech is the cutting edge of an advanced city, a city that wants to adapt to the future generation, a city that wants a quality population.”
“SOCIAL AND economic disparities are burning issues in Israel today, and access of hi-tech to the periphery is a major tool to address this. It should be dealt with before many other things that money is being spent on,” says Prof. Ofra Meisels of the Faculty of Education at the University of Haifa.
“To me, it is very urgent to create a situation where places of high status and earning ability will not be only at the Center. Accessibility of this option should be accessible first and foremost at the education level, and certainly in finding jobs in these areas. Such a step would lead to a strong population and mostly offer a horizon of economic development. It is also worth strengthening the conditions in Kiryat Shmona or Netivot, and not just Tel Aviv. People often choose their profession as a function of what they see around them. If the young people in the periphery have hi-tech in their mind’s eye, then it will be their ambition. They will set goals for themselves and also get there,” says Meisels.
“There are a lot of plans, but obviously during the election everything has been postponed,” says Ofir Dubovi, co-founder of the OpenValley Entrepreneurship and Innovation Network.
“The network constitutes an engine for growth and cultivation in hi-tech and associations outside of the Center’s cities. We accompany 130 start-ups up North. Up until we created this platform for them, they had to go to Tel Aviv. The problem starts first with guys from the periphery graduating from the academy and coming to Tel Aviv because there is work. It all starts with producing a hi-tech industry in the periphery, to keep them there. They will set up their homes and their families there.
“Today, the big hi-tech companies do not have enough incentives to open branches in the periphery. The incentives should also include personnel training exactly for the professions needed in hi-tech,” says Dubovi.
The Economy Ministry did not respond to this report.
Translated by Alon Einhorn.