Israel’s stagnation in hi-tech sector

A recent human capital report by the Israel Innovation Authority (IIA) indicates stagnation in the country’s hi-tech sector after record growth registered in 2021.

The 2022-2023 report, written by the IIA and the Israeli Start-Up Nation Policy Institute (SNPI), said following the global slowdown, a 70-percent year-on-year increase in layoffs was recorded in the Israeli hi-tech during the second half of 2022.

The negative trend continued in the first quarter of 2023, with 25 percent of the hi-tech companies planning layoffs and 25 percent reported halting recruitment, the report added.

For the first time since 2008, the number of hi-tech employees in Israel shrunk in a single quarter, with a decline of 0.2 percent in the fourth quarter, it noted.

Throughout 2022, the number of hi-tech employees rose by just 7.4 percent compared to 12 percent in 2021.

SNPI CEO Uri Gabai explained that the combination of the global recession effects and the ramifications of political and social instability in Israel resulted in companies halting recruitment, forgoing salary increases, and a high rate of layoffs.

“If this negative trend continues, it will jeopardize the attractiveness and leadership of Israeli hi-tech,” he warned. ■

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