Israel's hi-tech paradox: Record degrees, stagnant employment for Arab graduates - opinion

As reflected in recent publications, the Israeli market does not only suffer from a talent shortage, but primarily from a “shortage of openness.” A significant portion of the missing human capital for hi-tech already exists within the system, but current recruitment processes filter it out in a way that perpetuates underrepresentation and harms national resilience.

Bank of Israel data reveals a total disconnect between investment and results: in the last over a decade (2009-2023), the rate of Arabs among hi-tech graduates nearly doubled, from 4.6% to 9.0%. This is a tremendous success for academia and for the aspirations of these young people. Yet, on the other side, their representation among young hi-tech employees remains exceptionally low, standing at only 3.7% in 2023, a stagnant figure that does not reflect the massive growth in the talent pool. This means an enormous loss of high-quality human capital in the very place where the economy needs it most.

According to the Innovation Authority's 2024 report, labor productivity in hi-tech is 3.5 times higher than in other sectors. When the state gives up on 9% of its most talented graduates, it knowingly relinquishes a growth engine that could reduce the national deficit and strengthen social resilience.

The gap between 9% of graduates and 3.7% of employees indicates deep barriers during the transition phase. The pain stems first and foremost from a lack of “hidden capital,” information networks, and connections (networking). In a sector based on a "friend brings a friend" and where service in military technology units serves as a “quality seal” and an exclusive benchmark for excellence, the young Arab graduate starts at a structural disadvantage.

Furthermore, in an era where resume screening is becoming automated, the problem takes on a technological face. Recent studies show that AI-based recruitment algorithms may discriminate against minority candidates based on cultural background, names, or place of residence. Without a conscious, human "bridge," Arab talent is simply erased from the system before the first interview.

The gap is not only cultural but physical. Approximately 70% of hi-tech jobs are concentrated in the Tel Aviv and Central districts. For a young Arab graduate from the Galilee, the distance to the center is an economic, logistical, and social barrier. Academia becomes an “isolated island” without a physical connection to employment hubs, leading to degrees being left on the shelf while the industry in the center cries out for workers.

To change the trend for young Arabs, the state and the industry must invest in bridging programs focused on three axes:

Breaking networking barriers: Building direct connections between students in the periphery and industry leaders during their studies.

Personal placement support: Targeted preparation for tests and interviews, and bridging the “cultural code” gaps of recruitment.

Creating employment hubs in the North: Bringing high-tech to the talent, as we are promoting in our work plan, to generate regional resilience and local growth.

The Bank of Israel study is a wake-up call. We at Tsofen-Tashbik operate precisely at this point of failure. We are creating the structural bridge between academia and employment, understanding that turning the 9% of graduates into actual employees is the key to Israel's economic resilience. Only in this way can we ensure that Israeli hi-tech stops suffering from a lack of openness and begins to realize the immense potential of all of Israeli society.