One of the most worrying trends in the Israel Innovation Authority tech job report published today is the growing number of tech employees that have left Israel since the start of the war. Between October 2023 and July 2024, 8,300 tech employees left Israel for an extended period of at least a year, representing 2.1% of the entire tech workforce in Israel. 1,207 tech employees left Israel in October 2023 alone.
The report uncovers other worrying trends in addition to relocation. According to the report, for the first time in at least a decade, the Israeli high-tech industry experienced a decline in the number of employees, with about 5,000 employees leaving the industry in 2024. The report stresses that the overall number of employees in high-tech in Israel fell to 390,847 in 2024, down 1.2% from 2023 - the first time that the number of employees in the industry has contracted for more than a decade. This is a change from the consistent growth pattern that characterized the industry for more than a decade, during which time the number of tech employees nearly doubled from 213,493 in 2012.
Israel Innovation Authority CEO Dror Bin said, "The high-tech employment report emphasizes the need for continued focused investment in the industry, which is the main growth engine of the Israeli economy. In a period of security, political and economic uncertainty, the data indicate challenges that require immediate attention: stagnation in employment, a change in the mix of roles and an increase in the scale of relocation."
The report found that Israeli tech companies have 440,000 employees abroad compared with 400,000 in Israel. Privately-held Israeli tech companies have 190,000 employees in Israel and 242,000 abroad, while publicly traded Israeli tech companies have only 63,000 employees in Israel and 199,000 abroad. This distribution varies significantly by role - in sales, marketing and customer service, 75% of employees are abroad, while in R&D positions distribution is more balanced with 52% in Israel. Senior management roles remained mainly in Israel (64%). Despite these trends, 59% of new hires by Israeli high-tech companies in 2024 were in Israel.
Changes in the composition of jobs and wages
The report also finds a major change in the composition of tech jobs. The percentage of employees in R&D roles rose from 37.4% in 2012 to 50.6% in 2024, which shows an increasing focus on core tech development. In 2024 alone, R&D jobs rose by about 7,000 jobs. At the same time, the proportion of employees in head office and product roles fell significantly, from 41.1% in 2012 to 28.9% in 2024. This change contradicts the goal of expanding companies' activities beyond R&D to create complete companies operating from Israel.
The report also found that the wage gap between tech employees and the rest of the economy continues to widen. In 2024, the average monthly wage in the tech industry reached NIS 32,341, 2.8 times the average wage in other sectors of the economy (NIS 11,491). This gap increased from 2.3 times in 2012, when the average tech salary was NIS 18,920. The report also notes that despite the general decline in employment, there are certain positive signs, including the fact that the number of tech job vacancies rose to about 17,000 in December 2024. This figure reflects a recovery, given that the industry saw a drastic decline in vacancies immediately after the outbreak of the war in October 2023, reaching a low of just 8,000 vacancies in July 2023.
The report stresses the need to implement the recommendations of the Perlmutter Committee to increase the number of employees with the required tech skills. It also emphasizes the urgent need to strengthen the skills of non-technical workers, especially in spoken English, to support growth in employment other than in R&D jobs in Israel. The Innovation Authority report concludes that maintaining Israel's position at the forefront of innovation in the global economy will require a combined effort from the government and industry to invest in human capital, improve skills, bring back employees who left Israel, and expand business activity within the country.
Published by Globes, Israel business news - en.globes.co.il - on April 7, 2025.
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