"Imagine that 5% of Israelis are world leaders in AI, but everyone else is laid off because of it. We need a holistic plan that covers the entire economy," Prof. Eugene Kandel, chairperson of the Tel Aviv Stock Exchange and of the RISE Israel Institute, issued this warning at the "Globes" "Going Long on Israel" conference in Tel Aviv this week.
Talking to "Globes" technology editor Assaf Gilead, Prof. Kandel spoke out against the pessimistic prognostications about the impact of AI on the economy, but called for advance planning for the change. "It’s not certain that artificial intelligence will reduce employment in high tech. John Maynard Keynes spoke a hundred years ago about technology replacing people, and he was wrong. From that time employment actually grew rapidly until 2000. Since then it has started to moderate in terms of the percentage of the workforce in work, and that’s worrying."
Kandel related that, in 2014, when he was still head of the National Economic Council, Prime Minister Benjamin Netanyahu asked him to talk about this in the government. "Unfortunately, not too much has been done since then, but there were plans. It’s not something that can be solved by some government decision of legislation in the Knesset.
"It has to be something holistic, because we as a small country will be hit by artificial intelligence. Everyone will be hit if there’s an impact on employment. The question is whether we will lose more than we gain, because as a small country we can gain more."
"To change the whole system"
How is that to be done? "What is required is a strategy that doesn’t just look at the 8% who work in high tech but at the other 92% in the economy, most of whom work with lower productivity than in the OECD. You can’t look at the tech workers as a separate group. Yossi Vardi once said to me, ‘I deal with 5% of the population and you with 95%.’ I told him that it doesn’t work that way. We constantly look at this or that item without considering the general picture."
The challenge that Israel faces in AI recently led to the formation of a National Artificial Intelligence Directorate in the Prime Minister’s Office, led by Brigadier General (res.) Erez Askal. Kandel welcomes the move, but explains why it isn’t enough. "After three committees, finally there’s a plan. I’m glad about that, and they appointed a high-quality person. But again: what he is supposed to do is to develop Israeli technological leadership in that field. What about all the rest?
"In the end, the directorate is a body in the Prime Minister’s Office with a budget and a promise of cooperation, but it has no powers. When I was at the National Economic Council in 2014 we produced a plan for national projects. You need cooperation, but in Israel cooperation works in such a way that any one party can stop the project. We have to change the whole system, but if it doesn’t happen tomorrow morning we need to create mechanisms that will overcome that."
For Kandel, countries such as Singapore and the UAE are good examples of the way in which the government should act in AI. "Israel is in the top five for every criterion of the functioning of the market, and in 45th place for everything to do with the functioning of the government. The UAE is ranked exactly the opposite way. Were we to merge our capabilities, we could be a leading country in artificial intelligence; we would bring the market and they would bring their ability in government, but it’s much easier for us to learn from them about the government side than for them to learn to us about the market."
Opening the stock exchange to the world
Kandel’s other hat is that of chairperson of the Tel Aviv Stock Exchange. In that role, he looks with satisfaction at the achievements already chalked up as a result of the switch to Monday to Friday trading. "The official aim of the move announced by the Israel Securities Authority and the Tel Aviv Stock Exchange was to make the stock exchange more attractive to investors overseas who look for stability, including in politics and governance, which we don’t have here, and at the same time find the Israeli economy interesting to them. They want to invest easily, and up to now we haven’t really given them that. A series of measures by the Tel Aviv Stock Exchange, the Israel Securities Authority, the Bank of Israel, the banks and the companies that trade via the stock exchange opened the door to say, ‘Come.’"
Kandel says that the change in trading days is one of these measures, as it enables all the players in the world to trade on the days on which they work in any case. "We jumped from a trading volume of NIS 1.6 billion to a volume of NIS 4.6 billion, with foreign investors accounting for 40% of that. We have a service that translates quarterly and annual reports by means of AI, and we carried out a reform in market making, which has become a profession. Companies in the tailor-made market making program raised their trading volume by 70%."
On Kandel’s watch as chairperson of the exchange it recorded a major achievement when cybersecurity giant Palo Alto Networks announced that it would list for trading in Tel Aviv in addition to its listing on Nasdaq when it bought Israel company CyberArk for $21 billion.
Asked to what extent Palo Alto’s decision might bring more companies to Israel in its wake, Kandel says, "I’m not a prophet, but over the years an effort has been made to bring dual-listed companies here, listed first of all in their own countries, principally on Nasdaq and the New York Stock Exchange, and then with us as well. There was a regulatory problem that we are hoping to resolve - the Securities Authority is pushing for change, and unfortunately it’s stuck in the Knesset."
Kandel refers to the initiative to amend the Securities Law to allow companies with different types of shares - as is normal for leading overseas companies - to be registered as dual listed. Current Israeli law forbids such companies from being traded on the stock exchange.
The Tel Aviv Stock Exchange is aiming at companies worth $500 million to $1 billion, Kandel says. "On Nasdaq, a company has to be worth $5-6 billion before anyone pays attention to it. In our view, companies worth $500 million or $ 1 billion can list for trading in Tel Aviv with global distribution, and the foreign investors will set the price."
The advantage for such a company, Kandel points out, arises from the fact that "you start to be traded in Israel in accordance with US rules, you have investors who know you, and so when you grow you can transfer to Nasdaq because you aren’t coming out of nowhere. It’s an opportunity for technology companies, and overseas banks are also interested because they see the potential."
"No-one knows how many tech workers there are in Israel"
As someone who has worked for many years in strengthening Israel’s technology industry, Kandel is not quick to get fussed over figures indicating that the number of people in the industry fell by 2% between 2024 and 2025.
"There’s a paradox here," he says. "No-one can say exactly how many people work in Israel’s tech industry. Why? Because the international norm for statistical calculation of employment in technology is by sector, not by company, and a sector that spends at least 15% on research and development is defined as high tech. But according to that definition there are 27,500 high-tech companies in Israel. Anyone who knows will say that the actual number is not more than 7,000 companies. That’s a difference of 190,000 in the number of people employed. So all the calculations of how much it has declined - no-one really knows."
In this context, Kandel levels criticism at the target that the government set for the proportion of the workforce in high tech. "A decision on 15% sounds good on television, but decisions like that simply don’t work. High tech has stagnated for three to four years as far as manpower and founding of new companies are concerned. You can’t say, ‘Hey, there should be a million workers in high tech.’ That’s a very strange way of defining policy goals. The goal should be enhancing the economic value of all the workers in the economy, in technology and other sectors."
Israel’s tech industry is mistaken, in Kandel’s view, in that it doesn’t invest more in research to promote a strategy of innovation in Israel. In the past, Kandel served as chairperson of Startup Nation Central (SNC), a non-profit organization that engages in such research, and that has recently seen its financing shrink considerably. "We had something amazing here. Paul Singer and Terry Kassel (businessmen who contributed to SNC - A.G.) invested tens of millions of dollars in improving Israel’s tech sector, in making it accessible and in opening doors. We brought 250 companies here to meet small startups and understand what they do.
"None of this would have happened if we had offered paid services. We simply went and marketed Israel. We also brought hundreds of haredi women and people from Arab society into the core of Israel’s tech industry. All these things take money. But you can’t charge the companies money for this, and the government can never make up the shortfall."
In the light of this, Kandel calls on the industry to finance the activity in this area, including finance for RISE. "The organization is focused on innovation strategy, and it doesn’t charge money for the reports that everyone reads. The industry should fund this. Unfortunately, the industry is in no hurry to do that. It funds lobbying but not the long term, and that’s a pity."
The conference took place thanks to collaboration with Clal Insurance and with sponsorship from One Zero Bank, Keystone, and Danel.
Published by Globes, Israel business news - en.globes.co.il - on April 28, 2026.
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