2025 began with sharp price rises in Israel of consumer products as well as electricity and water rates, municipal taxes and the VAT hike to 18%. In such circumstances, tech managers are used to receiving demands from employees wanting a salary rise.
While this may happen on a job-by-job basis for experienced employees with a history of academic and practical excellence, the general trend is the opposite: a continued decline in salaries and job supply in Israel's tech industry.
According to Central Bureau of Statistics data published last week, the average monthly tech salary in Israel fell below the NIS 30,000 mark towards the end of last year, after crossing above it for five months. In fact, according to the Central Bureau of Statistics, 2024 is the first year in many that saw no increase in salaries in the -tech industry.
At the end of 2021, the average monthly salary in Israel in the tech sector was NIS 26,428. At the end of 2022, as the global tech crisis began, the average monthly salary continued to rise to NIS 27,787 and by the end of 2023, it has already reached NIS 29,826. But in 2024, for the first time, the average monthly salary shrank to NIS 29,736, after being above NIS 30,000 for part of the year.
According to the Central Bureau of Statistics, the salary of software developers fell to NIS 31,100, after already reaching over NIS 33,000 between June and September last year, returning to the numbers typical of 2023.
The number of employees in the sector is shrinking
In summarizing the average salary in tech industry, the Central Bureau of Statistics also counted the number of employees in the tech sector, which is shrinking. After reaching 400,000 employees in most months of last year, it has fallen back around 398-399,000 employees.
The same is true of the core professions of high-tech: the number of software developers fell from 218,000 to 217,000 between last summer and fall, and the number of engineers and scientific R&D employees fell to a low not seen since last decade of about 50,000.
A comparison made by the Central Bureau of Statistics between the data of last November and the data published before the war shows that there was a 33% fall in the number of vacant jobs in the field of network engineers, an 11% decrease in jobs in the engineering and technician professions, a 5% decrease in engineering jobs, and a 1% decrease in software development.
Ethosa tech placement agency CEO Eyal Solomon thinks that because the salary decline over the past six months in Israeli high-tech has ranged from 3% to 5%, "and considering the increase in the cost of living, this is a higher real wage decline," he says. "We are in a time like no other, where if in the past employees were used to the fact that a new job meant a pay increase compared with the previous salary, it no longer exists." According to Solomon, "'Full stack' engineers (experienced engineers who specialize in many tasks from different aspects of development) whose salary ranges from NIS 38,000 to 41,000, are signing salary contracts of NIS 34,000-35,000. Not long ago, we saw a firmware engineer who, in normal times, earns NIS 50,000 a month, on a NIS 41,000 contract."
Signing on bonuses have disappeared: "I don't remember such a thing"
Solomon says signing on bonuses in the industry have disappeared and the competition for each employee, which used to be aggressive, no longer exists. "Recruiters say - if he's not interested in joining, he doesn't need to, someone else will come along. I don't remember such a thing - not even in the dot-com crisis, the subprime crisis or the post-Covid crisis of 2022.
"In practice, when there are fewer startup companies and more employees for each position, companies have a mindset that says - how can I pay less for each position."
Timor Shabtay, a human resources, salary and benefits consultant, explains that the market has become more selective. "Those in a good bargaining position manage to upgrade conditions, but this is not a broad trend but rather targeted adjustments, apparently. Salary declines can result from the firing of high-paid workers.
"In addition, today there are new trends such as The Big Stay, meaning employees who stay in their jobs due to economic uncertainty. Or Quiet Quitting, workers who do the minimum required and no more. This goes hand in hand with the lack of salary hikes."
Published by Globes, Israel business news - en.globes.co.il - on February 24, 2025.
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