As the coronavirus pandemic ravaged the Israeli economy, sparking unemployment, the tech sector has experienced a shortage of professionals, according to a new report from the Israel Innovation Authority and Start-Up Nation Central.
According to the human capital report released on Thursday, there were 13,000 vacant positions at the end of December 2020. This figure is 30% lower than the number of jobs available in June 2019, when a previous report was released, showing that even While technology, the economy has been blown away during the pandemic, it has not escaped unscathed.
Israel, however, appears to be emerging from the pandemic thanks to a very successful vaccination campaign. This allows the economy to get back on track after a 2.5% contraction in 2020 due to the pandemic, with forced social distancing blocking businesses and economic activity.
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Despite a recession, Israel’s economy has proven to be in better shape than other developed countries as its tech industry has continued to grow, but not without setbacks.
Some populations, businesses and sectors have been more affected by the pandemic than others, according to the report. The most affected have been women, ultra-Orthodox and Arab women, who have become more involved in recent years in the technological manna of the country.
“The coronavirus crisis has put an end to the positive trends of recent years regarding the increased integration of women and members of Arab and ultra-Orthodox communities into high technology,” the report said.
In 2020, “there has been an alarming drop in the number of women who have founded technology companies in Israel,” the report’s authors said in a statement.
Female tech founders made up just 11% of the 7,544 founders in 2020, up from 14% in 2019, a record year. The overall share of women in the high-tech sector, however, was similar to that of the previous year and remained at 28%.
There was a stagnation in the ratio of ultra-Orthodox employees to all high-tech employees, at 3.3%, similar to 2019, after five years of continuous increase. In 2014, the figure was just over 2%, according to the data.
The share of Arab women in the total number of high-tech employees in the Arab sector fell by 10 percentage points, from 42% to 32%. The proportion of Arab employees out of all tech employees fell to 2.3% in 2020, from 3% in 2018 and 2.5% in 2019, according to the data. In 2012, this figure was less than 2%.
Arabs make up 21% of Israel’s population, so they are significantly under-represented in the tech industry.
The coronavirus crisis has also affected industry players unevenly – with more than a third of small businesses, with one to 10 employees, saying they have been “severely affected by the crisis”. They were more likely to have frozen hiring, faced a decrease in the number of experienced tech employees and reduced their demand for tech positions relative to their workforce, according to the report. Multinationals and large companies, on the other hand, were able to survive the crisis better.
Despite the pandemic, the number of high-tech employees grew in 2020 at a moderate rate of 0.6%, compared to an average annual growth of 6% over the previous seven to eight years. The impact of the pandemic was felt severely in the second quarter of the year, when many employees were sent on unpaid leave, but a recovery was already evident in the following quarter, the data showed.
There was an annual average of 334,000 people employed in the tech sector in 2020, according to the report, representing 9.8% of the total workforce, a record high.
The decline in job vacancies last year was in part attributable to the fact that, due to economic uncertainty, significantly fewer workers quit voluntarily compared to previous years.
“The fact that the demand for human capital in high tech remains high even in a year of global crisis suggests that the shortage is chronic,” said Eugene Kandel, CEO of Start-Up Nation Central, in a preface to the report. As the demand for technology increases, as highlighted by the pandemic, this will make the labor shortage even more acute, and the demand for employees capable of developing solutions will increase, both in the industry of high-tech and other industries in digital transformation, it added.
The way to fill this shortage, he said, is to tap into under-represented populations.
“Without the large-scale integration of women, Arabs and the ultra-Orthodox population into high-tech, the main engine of growth of the Israeli economy will be fuelless, and the negative impact will far exceed the relative size. of the technological industry in the economy. Kandel said. “They represent the main potential for increasing the supply of high-tech employees.”
The accelerated digitization fueled by the pandemic has come at the expense of physical activity. This was also reflected in Israeli high-tech employment figures: the sectors that showed the largest annual increase in the number of employees (3.5% -5.2%) were software-based. On average, hardware-based sectors, such as telecommunications and technology solutions for the industrial sector, are downsizing by around 3% in 2020.
“2020 has been one of the best years for Israeli high tech with record fundraising, unprecedented demand for Israeli technology and an impressive number of Israeli companies joining the unicorn club,” said Uri Gabai, co-CEO of Start-Up Nation Central. “However, the figures presented in this report indicate that we have not escaped the crisis unscathed. Small tech companies, in particular, have lost experienced tech employees and hired fewer new employees. “
The negative impact of the crisis on the economic activity of startups can hardly be felt in the short term, but could later translate into a decrease in growing companies that would have employed thousands of employees with productivity and levels high wages, he added.
The “glass ceiling” of the industry is talent, Gabai said in a telephone interview. “Now is the time for smart and efficient government. We have real problems and without a functioning government we have no way of dealing with the challenges we face.
Israel has emerged from a fourth round of general elections in two years with no clear winner and no coalition government in sight.
The Israeli government must be a “major player” in creating a talent pool for the industry, defining education policies and training programs to prepare the population for the jobs of the future, in which it does not. there will be no taxi drivers, as cars will. be self-sufficient and not have a cashier, Gabai said. “Low-end jobs are disappearing before our eyes… if we don’t train young people for the jobs of tomorrow, we will experience a huge rise in unemployment in the nation of startups.”
Even though the tech industry has enjoyed relative stability during the coronavirus crisis, it would be wrong to conclude that it “needs less investment from the state and can rely solely on the forces. market, ”said Sagi Dagan, vice president, head of the growth division, at the Israel Innovation Authority. “Quite the contrary: countries around the world are realizing that investing in civilian research and development is crucial for a thriving economy, high productivity and the adoption of technology. These countries are increasing, not decreasing, their investments in technology. “
Human capital is a significant obstacle to the continued prosperity and leadership of Israeli high-tech, Dagan said. The job market in Israel is diverse, and companies that know how to recruit and retain a diverse set of employees “are the ones that can grow better, be more stable” and more competitive.