Israel's tech sector, which is the main engine of the economy, is facing a particularly challenging period, according to a study published today by the Taub Center for Social Policy Research. The study found a rise in unemployment among tech workers, a fall in the number of vacant jobs, and widening social and geographic differences. The main reasons, according to the researchers, are the effects of the war, and acceleration in AI use.
According to the data, between 2014 and 2023, the number of people employed in Israel's tech industry increased by about 60%, an addition of about 150,000 employees, mainly in the R&D field. Wages rose significantly and remain much higher than the average in the economy. However, since the outbreak of the war, the trend has reversed. the unemployment rate in the industry has risen and exceeded the average in the economy, and in 2024 there was a sharp fall in the number of vacant jobs, mainly for young and inexperienced workers, a trend that has been called the "juniors crisis."
The study is based on a comprehensive analysis of the Central Bureau of Statistics' 2023-2024 Labor Force Survey data, examining the labor market for people aged 25-64. The researchers examined the employment status of different population groups: employed, unemployed, and job seekers, and incorporated demographic variables such as gender, sector, and place of residence. In addition, AI exposure indices were used to assess the extent to which typical tasks in different jobs can be performed by AI systems, to estimate the level of risk of workers being replaced by automation.
AI is changing the face of employment in tech industries
The study also outlines wide differences in employment. Almost 25% of non-haredi Jewish men are employed in high-tech, compared with only about 12% of non-haredi Jewish women. In haredi society, less than 10% are employed in the industry, and in Arab society, less than 5%. Geographically, there has been a decline in employment in most regions of the country, especially in the north, the Sea of Galilee and Safed, while Jerusalem and the Jezreel Valley saw a slight increase. Tel Aviv continues to lead in terms of employment, along with Petah Tikva, Haifa and Rehovot.
At the same time, the study found that tech services are leading the economy in adopting AI technologies. This trend is accompanied by a reduction in the hiring new employees and the replacement of skilled workers with automated systems. The researchers warn that in the long term, a significant decline in employment in the industry is expected, if appropriate policy measures are not taken.
Prof. Gil Epstein, one of the authors of the study writes, "Implementation of AI and acceleration of automation are changing the face of employment in tech industries." According to him, there is a noticeable decrease in the number of people employed in support positions, alongside an increase in their wages, a trend that sharpens the need for professional retraining and targeted training.
The Taub Center also recommends that the government form a strategy that will leverage the AI revolution to promote quality employment and reduce gaps, especially in peripheral regions. "This is a testing time for economic policy in Israel," the researchers stress, "Since preserving and strengthening the economy's main growth engine is essential for recovery and growth in the long term."
Published by Globes, Israel business news - en.globes.co.il - on September 18, 2025.
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