Israel’s 400,000 tech employees have for some years been expensive in global terms, with their cost second only to that of Silicon Valley. The tech giants preferred to pay dearly for the Israeli worker, knowing that they would receive a better result than their counterparts in India and eastern Europe, while their price was still lower than tech workers on their home turf.
However, according to a study by the Israel Growth Forum - an organization operated by Israeli companies such as Wix and Monday.com - the cost of Israeli developers has surpassed that of their US counterparts for the first time ever. This has been mainly due to the strengthening of the shekel against the US dollar, since most of the capital in Israeli tech is raised in dollars, while most of the expenses, including wages and options for local employees, are made in shekels.
The study, based on data from 10,000 employees at seven Israeli growth companies that are members of the forum - whose names were not disclosed - shows that the cost of an Israeli tech worker is 1.02 times the cost of their US counterpart. For comparison, in May 2025, the Israeli salary was 85% of the US salary. "In the past year, the cost of employment in Israel in dollar terms has increased by 17%-22%, and the balance point at which the cost of employing a worker in Israel is equal to that of an equivalent employee in the US is around NIS 3.21/$," the forum reported.
And what about Eastern Europe?
The study found that compared with Eastern European countries, the picture points to a profound change in the competitive conditions in which business decisions are made. For years, these countries offered significantly lower employment costs, yet many companies chose to establish and develop centers in Israel due to the quality of human capital, experience, and the local ecosystem.
Today, this trend is changing because the quality of talent in the world is improving, the AI revolution is changing the way companies build teams, and at the same time, the appreciation of the shekel and the weakening of the dollar have increased the cost gaps. Tech workers in Israel are currently 2.4 times more expensive than their counterparts in Poland, Lithuania, Romania, and Ukraine - a gap that creates a growing incentive to direct new hiring to these countries, and to slow down or stop hiring in Israel.
Another survey, led by the Viola Growth Fund in collaboration with the Israel Growth Forum, shows that 58% of the 62 growth companies surveyed reported that they had slowed or frozen fundraising in Israel as of June 2026. About 55% of the companies cited the shekel-dollar exchange rate as a major factor, along with the effects of AI. In the same survey, 15% of companies reported that, following the strengthening of the shekel, they had already opened facilities abroad that were originally planned to be opened in Israel.
The problem with the Ministry of Finance grants
To deal with the phenomenon, this week, Minister of Finance Bezalel Smotrich unveiled a grant program totaling NIS 1.6 billion for early stage tech companies, with the aim of helping those affected by the strengthening of the shekel. However, development centers and growth companies criticized the program, claiming that it did not provide a solution to reducing the cost of the Israeli worker through taxation tools or easing employment costs.
"The published program focuses on creating future growth engines, while the companies need a response to the immediate challenges created by the strengthening of the shekel," said Israeli Association for Advanced Industries (IATI) CEO Karin Mayer Rubinstein.
"Many companies are not looking for incentives for growth, but rather tools that will help them maintain operations in Israel. Along with long-term measures, short-term solutions are also needed through temporary provisions or other means that will enable the burden to be divided between the state and the companies. Among other things, adjustments in tax payments and employer expenses must be examined, including temporary mechanisms that will ease the companies' cash flow."
Published by Globes, Israel business news - en.globes.co.il - on July 2, 2026.
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