Proportion of Israeli workforce in high tech to rise sharply

High-tech employees Photo: Shutterstock ASAP Creative

Aaron Institute for Economic Policy researchers predict that the proportion will rise from 9% at present to 15% by 2030.

The force of the high-tech industry in Israel, the wage gaps between the mainstream and innovative economies, and the wish to improve the economic situation of Arabs and haredim (ultra-Orthodox Jews) are behind the many efforts to increase the proportion of Israeli employees working in the high-tech industry. This proportion has been steady since 2001, rising only from 8% to 9% at present.

A new study conducted by researchers at the Aaron Institute for Economic Policy takes an optimistic view of these efforts. The study projects an increase in the proportion of the Israeli labor force working in high tech in the coming decade, with the proportion varying in the 11.5-15% range. This is still less than the 15% rate forecast published by the Israel Innovation Authority in late 2017, but is more optimistic than the figures published the Aaron Institute in late February and those of other researchers. The new findings will be presented at a conference at the Aaron Institute. The study was carried out by Prof. Zvi Eckstein, head of the Institute; Benjamin Bental; Dan Peled; and Sergei Somkin.

The figures used by the researchers are for children in 1975-1985. The figures were previously used by the Ministry of Finance and the Ministry of Labor, Social Affairs, and Social Services for studies about high tech. The advantage of these data is that they provide information about specific people from the time they were in high school through their activity in the labor market, and enable the researchers to track the subjects' decisions. The researchers can find out whether a person matriculated in science, whether he or she continued on to academic studies in science and mathematics, and whether he or she works in high tech.

The Aaron Institute examined the differences in the proportion of employees working in high tech between different age brackets. The researchers found that only 7.3% of employees in the 38-64 age bracket work in high tech. They state that the exit of these employees from the labor market and their replacement by younger employees will directly increase the general proportion of high-tech employees, which they project will lead to an increase in the proportion of high-tech employment to 11.5% and a 0.3% annual rise in GDP, amounting to a 3% increase by 2030.

The more optimistic forecast of a 15% rate of high-tech employment is based on certain assumptions. The first is that the current rising trend in the proportion of those employed in high tech will continue and. The second is that studies in science, technology, engineering, and mathematics (STEM) will continue to grow. The third is that the state will continue encouraging matriculation in science, and the fourth is that demand for technological products will remain strong, which will also bolster the demand for employees in high tech.

The study states that this more optimistic forecast means a 10% increase in GDP by 2030 (a 1% annual increase). Eckstein told "Globes" that the optimistic forecast is not because of changes in Arab society or haredi society; it is based on the continuation of trends that are already taking place. He adds that no dramatic change in the composition of the population is expected by 2030.

"Do not import foreign workers for the high-tech industry"

Three months ago, the Aaron Institute conducted a round table discussion with participation from government agencies, research institutes, and non-profit organizations about increasing the proportion of employment in Israeli high tech. The discussion focused on an earlier study conducted by the same researchers. The two studies are part of a larger study on the subject. The earlier study found that the 12% target for high-tech employment would not be achieved in the coming years. The studies do not contradict each other, but Eckstein says that the findings of the current study are a pleasant surprise for him, and are more optimistic than the previous findings.

In the previous study, the researchers conducted a simulation according to population groups: non-haredi Jews, Arabs, and haredim (each group was divided between men and women). The study examined whether increasing the number of people studying STEM would increase the proportion of people working in high tech, and whether other variables also affected the proportion. The simulation revealed that the proportion of STEM students did not necessarily predict the proportion of high-tech employment.

Among non-haredi Jewish women, only 16% of those who studied science and mathematics work in high tech, compared with 27% among non-haredi Jewish men. This proportion was only 5% among Arab men, and was negligible among Arab women. The simulation results for haredim were rather surprising: 22-24% of those with STEM training work in high tech. According to the simulation, even if the proportion in all of the population groups rises to 33% the effect will be only a 2% increase in the proportion of workers employed in high tech.

The first study, however, did not take age groups into account, a major reason for the researchers' current optimism. They also present recommendations for supporting a further increase in the proportion of high-tech employment: strengthening and expanding matriculation in high school science studies for everyone, especially haredim and Arabs; expanding high-tech and STEM studies in higher education and in other frameworks, including specially adapted studies for haredim and Arabs; and not importing foreign workers ineligible for immigration to Israel unless they are needed as temporary experts.

Published by Globes, Israel business news - - on May 16, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

High-tech employees Photo: Shutterstock ASAP Creative
High-tech employees Photo: Shutterstock ASAP Creative
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