For years, Israel’s tech industry has been a driving force in the country’s economic growth, but in the last few years, job growth in the tech sector has leveled off, even to the point of coming to a near stand-still.
We are talking about Israeli tech companies that gave us the ground-breaking USB stick. So what is the reason for the slowdown? Back in February 2016, Bloomberg reported that up until 2012, Israel’s tech sector had surpassed gross domestic product in ten out of the 14 years.
“We used to be in the top five in many key performance indicators and we aren’t there anymore,” said Shally Tshuva, the high tech industry leader at consulting and accounting firm Deloitte Israel. “This isn’t because we did something wrong but because others are progressing at a much faster pace as they try to catch up.”
— The Tech Partnership (@TechPartnership) June 1, 2016
Or Offer, the co-founder, and CEO of SimilarWeb never thought it would be difficult to find workers for the fast-growing Internet data firm when he released the platform in 2011.
SimilarWeb.com uses big data technologies to collect, measure, analyze and provide user engagement statistics for websites and mobile apps.
But Reuters is reporting that an overall lack of skilled workers – engineers, technicians and even doctors, is jeopardizing Israel’s place in the tech world, forcing him to look for workers abroad.
“There’s a brutal fight over skilled employees,” said Offer, whose company has quadrupled in size in the past two years, hiring more than 200 new people. Mr. Offer has even set up a development center in Ukraine to boost the technical side of SimilarWeb.
According to the country’s chief scientist, Avi Hasson, the tech sector in Israel currently employs 140,000 people, yet it is estimated the industry will face a shortage of 10,000 workers in the next 10 years. “The issue of skilled and available manpower is the main barrier to growth and competitiveness in the field of high-tech,” Hasson said.
Multinational companies like Apple, Intel, and Google have been quick to snap up smaller start-up companies and set up research centers in Israel. High-tech goods and services now account for 12.5 percent of the nation’s GDP and account for almost half of its industrial exports, reports Stock Transcript.
It has become difficult for smaller, younger companies to compete for workers with the global giants operating within the country. “There are a lot of international players around, coming in with deep pockets. Facebook, Google, and others can make offers 50 percent above market and equity packages that are very lucrative,” said Nir Zohar, president of the website designer Wix.com
Bank of Israel Governor Karnit Flug has made an insightful observation concerning the lack of a viable workforce in the country. He cites several reasons for the shallow labor pool in Israel, including an aging population, lagging education, and the rather poor integration of the Arab, and ultra-orthodox communities into the labor pool. These two groups make up 30 percent of the population.