Belying reports about sharp increase in high-tech salaries and a surge in salaries offered to new recruits, a study by Prof. Moshe Zviran of the Leon Recanati Graduate School of Business Administration, Tel Aviv University, paints a different picture.
Zviran’s data are based on semi-annual salary surveys and tables and which are considered to be the most comprehensive and authoritative in the industry. The studies cover 300 companies employing over 90,000 people. Israel’s high-tech industry is estimated to have 125,000 employees.
Zviran’s data indicate a 5.4% increase in high-tech salaries in 2006, and followed a 5% increase in 2005 and a 4.8% increase in 2004. “The growth in the industry is continuing, and demand for good candidates is high, but there is no rampage” he said. “Despite high demand, there are no significant differences between the salaries offered to new candidates and the salaries paid to existing employees, as there was during the bubble era.”
Data indicate an 8-12% difference between salaries paid to new software engineers, algorithm creators, physicists, hardware engineers and in other professions, and the salaries paid to existing employees. There is almost no difference at all in professions with little demand.
Zviran said, “High-tech industry is unquestionably flourishing.” The ‘Zviran index’ provides a multi-year perspective on salary developments in Israel’s high-tech industry. It shows that high-tech salaries rose by 2.5% in September 2006-March 2007. This figure is weighted for the salaries of existing employees and the salaries offered to new employees.
Zviran predicts that high-tech salaries will rise by more than 5% in 2007. The Consumer Price Index (CPI) is projected to rise by 2% this year.
Zviran said a more important factor on salaries was the fall in the shekel-dollar exchange rate. “The shekel-dollar exchange rate has fallen from NIS 4.70 a year ago to NIS 4 today, a drop of 15%. High-tech salaries rose 5.4% during this period, which means that the actual increase in dollar terms was more than 20%. If the trend of rising salaries coupled with erosion of the exchange rate continues, high-tech industry could find itself in trouble because labor costs are denominated in shekels while most revenue is in foreign currency. Over time, this situation could create pressure.”
Published by Globes [online], Israel business news - www.globes.co.il - on May 2, 2007
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