Special Report: Arabs, Haredim must be brought into hi-tech sector

Increasing local Israeli talent needed to protect sector.

By YONAH JEREMY BOB
Haredi residents of Jerusalem’s Geula neighborhood (photo credit: MARC ISRAEL SELLEM)
Haredi residents of Jerusalem’s Geula neighborhood
(photo credit: MARC ISRAEL SELLEM)
The Arab and haredi communities must be integrated into the country’s hi-tech sector, according to the first report produced by State Comptroller Matanyahu Englman on Monday.
Englman said that the state’s Innovation Authority “must support the relevant government offices, including the Economy Ministry, in order to map out the technological areas in which the haredi [ultra-Orthodox] and Arab communities can integrate to obtain qualitative employment so that they can participate in the innovation” wave.
Currently, the report said that both Arabs and haredim together make up a strikingly tiny amount of all of hi-tech sector employees – only two percent.
Carefully studying government hi-tech related activity during the August 2018-March 2019 period, the state comptroller said that the country’s hi-tech sector has “a great influence on the State of Israel’s entire economy, on high quality employment and on the resilience of the Israeli economy by international measures.”
Hi-tech revenue made up NIS 58 billion of the country’s GDP in 2017 and provided NIS 55 billion in tax revenue during the years 2015-2018. Some 40% of Israel’s export revenue in 2017 was hi-tech related.
As of 2017, 8.3% of the work force – 290,000 Israelis – worked in the hi-tech sector, a number which continued to jump into 2019, although the impact of the coronavirus crisis could unpredictably affect the balance of the economy and the workforce.
Englman praised the conversion of the Bureau of the Economy Ministry Chief Science Officer into an independent Authority for Technological Innovation as moving in the right direction.
He noted that the authority had a budget of NIS 1.7 billion for innovation-related projects in 2018, of which it allocated NIS 125 million to 246 specific projects.
However, the report said that the comptroller “found gaps in different areas which could lead Israel to lose its edge in the technological arena and to make it harder to cope with challenges in the future.”
According to the report, a new body is needed – either entirely new or a heavily upgraded Innovation Authority – which has the power to coordinate long-term strategy for strengthening and preserving Israel’s hi-tech sector across the various government ministry lines and small-game agendas.
A specific gap area is employees, where the report found that there is a significant shortage of workers who are qualified to fill additional positions in hi-tech companies.
If these additional positions are filled, the Israeli economy could grow more and would be on steadier ground.
Conversely, if the shortage of qualified employees continues, the report suggested that competitors might overtake Israel in certain areas, which could lead to undermining the country’s hi-tech sector long-term.
Much of the report was finished by November 2019 with last minute changes made in February and earlier this month. But it is unclear if all of these recommendations are still as relevant 12 days after the World Health Organization declared coronavirus a pandemic on March 11.
In those 12 days, unemployment skyrocketed to over 16% – more than 500,000 people – potentially altering the entire economic picture in every sector.
A comptroller spokesman said that the office could not predict the future in these unstable times regarding how the current crisis might alter aspects of its recommendations. 
The report also suggested that the state support broadening the location of the hi-tech sector from Tel Aviv and the country’s center to areas in the periphery as well as to Jerusalem.
Physically locating more centers of hi-tech in a more diverse range of locations could better enable linking the sector's success to a greater portion of the country.