Israel's vaunted tech sector expecting more layoffs in 2023
Recent report confirms that Israel is experiencing the repercussions of global economic uncertainty
Some 25% of Israeli high-tech businesses are expecting more layoffs and an additional 25% are halting recruitment of new personnel during 2023, according to a new report published by Start-Up Nation Policy Institute (SNPI) and Israel Innovation Authority. According to the report, many companies are reportedly planning to reduce their workforce by as much as 5%.
The publication – Human Capital Report 2022-2023 Snapshot – released this week, notes the negative economic trend in Israel, which began with the global slowdown at the end of 2022 and worsened in the first quarter of 2023.
Israel Innovation Authority CEO Dror Bin linked the rise in layoffs to the decline in investments in the tech sector, saying that when the volume of private funding and public companies' valuation drop, so do the rates of high-tech employment.
"When money pours in, more people are getting hired in a nutshell, and since the middle of last year, we saw a decline in investment," Bin told Reuters news agency.
While the Israeli tech sector only employs about 10% of the total Israeli workforce, it produces more than half of the Jewish state’s exports.
High-tech companies in Israel raised just $1.7 billion during the first quarter of 2023, which constitutes a whopping 70% less than during the corresponding period in 2022. The current level of funding is reportedly at its lowest in four years.
"In 2021 and 2022...people just jumped from one position to another. Today, it's much more difficult to 'steal talent' from other companies. But there are still companies that are recruiting, so this is the good news," said Bin.
Like most economies, Israel has been affected by the current global economic uncertainty. In addition, the Netanyahu-led government’s controversial judicial overhaul plan has also had a negative impact on the level of investments in the Israeli tech industry.
”The human capital is the driving force behind Israel's technological leadership, and unlike other ecosystems that draw talents from around the world, Israeli High-Tech relies almost entirely on local talent and educational institutions. We must do our utmost to preserve the human capital within Israel, even as we hope for the impending end of the storm we are currently experiencing,” said SNPI CEO Uri Gabai.
“The results are particularly worrying and are a wake-up call for anyone who cares about Israeli high-tech,” he warned.
Click here to read the full 2023-2023 Human Capital Report update.
The All Israel News Staff is a team of journalists in Israel.