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Tel Aviv - Israel's High Tech Boom Threatened By Shallow Labor Pool

Published on: July 4, 2016 03:14 PM
By: Reuters
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FILE - Employees work at Internet data firm SimilarWeb at their offices in Tel Aviv, Israel July 4, 2016. REUTERS/Baz Ratner FILE - Employees work at Internet data firm SimilarWeb at their offices in Tel Aviv, Israel July 4, 2016. REUTERS/Baz Ratner

Tel Aviv - In the high tech hub of Tel Aviv, where companies have been responsible for ground-breaking advances like the USB stick, Or Offer never thought it would be hard to find workers for his fast-growing Internet data firm SimilarWeb.

But an alarming lack of engineers, technicians and even doctors, which is jeopardizing Israel’s place among the world’s technological elite, sent him looking abroad.

“There’s a brutal fight over skilled employees,” said Offer, whose company has quadrupled in size in the past two years, hiring over 200 new people.

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To boost the technical side of the business that analyzes website data, he set up a development center in Ukraine.

Without the huge populations of emerging markets like India or the vast network of foreigners who call Silicon Valley home, Israel’s high tech enterprise seems to have dried out the well.

Over the next decade it will face a shortage of about 10,000 engineers and programmers in a market that currently employs 140,000, according to the country’s chief scientist, Avi Hasson, who is the government’s point man on sustaining innovation.

“The issue of skilled and available manpower is the main barrier to growth and competitiveness in the field of high tech,” Hasson said.

The industry, which sprouted from an advanced military and flourished with state backing, became a major growth engine and investment magnet for Israel.

Multinationals like Apple, Intel and Google have been eager to snap up local start-ups and set up research centers. High-tech goods and services now account for 12.5 percent of Israel’s gross domestic product and half its industrial exports.

Younger firms are noticing the skills problem as they compete for workers with the global giants operating in Israel.

“There are a lot of international players around, coming in with deep pockets. Facebook, Google and others can make offers 50 percent above market and equity packages that are very lucrative,” said Nir Zohar, president of website-designer Wix.com, which is known for its big-budget Super Bowl ads. “It’s becoming harder and harder with the amount of effort you need to put in to recruit.”

HUMAN CAPITAL

Since taking office in 2013, Bank of Israel Governor Karnit Flug has been sounding the alarm over the threat to Israel’s pool of “human capital”.

An aging population, lagging education and poor integration of Israel’s Arab and ultra-Orthodox Jewish minorities in the labor market is making the workforce less effective, she said in a May speech. Combined, Israeli Arabs and ultra-Orthodox Jews make up about 30 percent of the population.

Nearly half the country’s doctors, for example, are 55 or older — the highest figure in the Western world — while the rate of students completing medical school is among the lowest.

University graduates in maths and computer science fell to 1,600 in 2008 from 3,000 in 2005. The figure has recovered, but not returned to prior levels. Israel is ranked 17 among the 34 members of the OECD in the ease of finding skilled workers.

Tech companies prospered for years by tapping into the skills of workers trained in the military or intelligence sectors and start-ups benefiting from tax breaks and government funding. But those are drying up.

Two years ago Israel lost the top spot it held for more than a decade among the OECD when it comes to investment in research and development, mainly due to a steep drop in government investment. South Korea is now top of the tree.

Ultra-Orthodox Jews and Arabs rarely serve in the military and are marginalized from the high tech industry. The government is now implementing a number of programmers to include them, like improving language skills and special training.

VISAS

Feeling the heat, firms have been fighting to bring in qualified foreigners to ease the stress.

“In Israel, to get a work permit is harder than to make peace,” said Eldad Tamir, head of the Tamir Fishman Investment House and a partner in Eucalyptus Growth Capital, a fund that invests in high tech companies.

Tamir’s partner in Eucalyptus, David Perlmutter, former chief product officer at Intel, lamented that Israel imports labor for agriculture and construction but not for technology.

“If you look at other countries that want to develop, they bring in workers. All of Silicon Valley is based on that. Here it doesn’t happen,” he said.

Nearly 75 percent of computer and math workers aged 25-44 employed in California’s Silicon Valley are foreign-born, according to the Silicon Valley Institute for Regional Studies.

In the 1990s, the influx of one million immigrants from the former Soviet Union helped fuel Israel’s high-tech boom. Today about 30,000 people arrive annually, but it is not enough to meet the demands of the growing industry.

“Israel was built in a very homogenous way in terms of our innovation ecosystem. We did import talent, but only Jewish talent,” and that needs to change, said Hasson.

Only an “anecdotal” number of foreign high tech workers are being brought in today, Hasson said, referring to a smattering of cases like the U.S.-born CEO of TowerJazz who over the past decade helped turn around the ailing chipmaker.

He said Israel would soon begin a pilot for issuing a few hundred work visas a year, but it’s unlikely to be enough.



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Read Comments (17)  —  Post Yours »

1

 Jul 04, 2016 at 03:57 PM Adopt A Job Says:

I think its time for the charedim to jump into the workforce. Times could not be better. Demand for workers are high while supply is low. Right now under the new tal law passed by Lapid, anyone over 24 can work with no army service. (Oh you do have to officially register. So I guess nebach you still have to shtel tzu to the evil tzionim. But no army duty is required) So basically you have great job opportunities and an easy passage to the work force. So whats holding the charedim back? Why is our only answer to alleviate poverty amoungst charedim to "adopt Kollels"? Why not "adopt a job" or "adopt a charedi college"? Lest people argue because torah is the ikkur. Noone denies that you should learn every free second possible. And working is a curse since adam ate from the eitz hadas. But our long standing mesora since moshe rabbeu has been for at-least a large sector of societies to work and learn together with maybe a few who learn forever. However, simpky to have a whole society just learn, remain poor and needy is simplly not under our jewish mesora.

2

 Jul 04, 2016 at 04:03 PM Nobody Says:

In the US tech companies scream shortage when all it is is a bid for cheap H1B visa labor. The people are there - they just don't want to pay them market wages.

I suspect this article is an attempt to export the same phenomena to Israel, so these companies can not only under pay them by American standards, they can under pay them by Israeli standards.

The end of the article all but confirms it.

3

 Jul 04, 2016 at 07:46 PM A doubt a Kollel Says:

Reply to #1  
Adopt A Job Says:

I think its time for the charedim to jump into the workforce. Times could not be better. Demand for workers are high while supply is low. Right now under the new tal law passed by Lapid, anyone over 24 can work with no army service. (Oh you do have to officially register. So I guess nebach you still have to shtel tzu to the evil tzionim. But no army duty is required) So basically you have great job opportunities and an easy passage to the work force. So whats holding the charedim back? Why is our only answer to alleviate poverty amoungst charedim to "adopt Kollels"? Why not "adopt a job" or "adopt a charedi college"? Lest people argue because torah is the ikkur. Noone denies that you should learn every free second possible. And working is a curse since adam ate from the eitz hadas. But our long standing mesora since moshe rabbeu has been for at-least a large sector of societies to work and learn together with maybe a few who learn forever. However, simpky to have a whole society just learn, remain poor and needy is simplly not under our jewish mesora.

Take your know-nothing somewhere else.

4

 Jul 04, 2016 at 08:00 PM Anonymous Says:

Reply to #1  
Adopt A Job Says:

I think its time for the charedim to jump into the workforce. Times could not be better. Demand for workers are high while supply is low. Right now under the new tal law passed by Lapid, anyone over 24 can work with no army service. (Oh you do have to officially register. So I guess nebach you still have to shtel tzu to the evil tzionim. But no army duty is required) So basically you have great job opportunities and an easy passage to the work force. So whats holding the charedim back? Why is our only answer to alleviate poverty amoungst charedim to "adopt Kollels"? Why not "adopt a job" or "adopt a charedi college"? Lest people argue because torah is the ikkur. Noone denies that you should learn every free second possible. And working is a curse since adam ate from the eitz hadas. But our long standing mesora since moshe rabbeu has been for at-least a large sector of societies to work and learn together with maybe a few who learn forever. However, simpky to have a whole society just learn, remain poor and needy is simplly not under our jewish mesora.

U'mein V' Umein.....This is one of the most cogent and articulate postings here on VIN in a long time addressing the crisis in both the Chareidi tzibur and the economy of EY. Given that Chareidim will eventually reproduce their way into the majority of the population, its basic math to know that the status quo is untenable. Unless they deliberately want to self-destruct and lead EY into a downward spiral of poverty and ignorance, they must change their attitude towards education and workforce participation. Twenty five percent of the population cannot support the other seventy five percent.

5

 Jul 04, 2016 at 08:34 PM savtat Says:

You need to start the STEM courses in 1st grade..... math and science do not just pop into your head. It needs to be respected and valued. Many of our gedolim were educated in math and science. Good examples are Rabbi Belsky and Rav Pam, z'l....

6

 Jul 04, 2016 at 10:47 PM cowdoc Says:

Reply to #1  
Adopt A Job Says:

I think its time for the charedim to jump into the workforce. Times could not be better. Demand for workers are high while supply is low. Right now under the new tal law passed by Lapid, anyone over 24 can work with no army service. (Oh you do have to officially register. So I guess nebach you still have to shtel tzu to the evil tzionim. But no army duty is required) So basically you have great job opportunities and an easy passage to the work force. So whats holding the charedim back? Why is our only answer to alleviate poverty amoungst charedim to "adopt Kollels"? Why not "adopt a job" or "adopt a charedi college"? Lest people argue because torah is the ikkur. Noone denies that you should learn every free second possible. And working is a curse since adam ate from the eitz hadas. But our long standing mesora since moshe rabbeu has been for at-least a large sector of societies to work and learn together with maybe a few who learn forever. However, simpky to have a whole society just learn, remain poor and needy is simplly not under our jewish mesora.

Feel bad for those of you that feel work is a curse. I enjoy working.

7

 Jul 04, 2016 at 11:33 PM Adopt A Job Says:

Reply to #3  
A doubt a Kollel Says:

Take your know-nothing somewhere else.

Please explain your disdain in an intellectual manner. You seem to imply that I "know nothing" and I am misinformed. Kindly elaborate.

8

 Jul 05, 2016 at 12:29 AM eliezer318 Says:

Oh, please do not import foreign workers! 20, 30 years ago many of us chareidim had super jobs in Information Technology on Wall St & elsewhere with top firms, making salaries that could at least put a dent in the expenses of our frum way of life. Then came the Visas for foreign information technology workers. Mostly from India, they were hastily trained and would work for a half to a quarter of the current US wage. Out-sourcing to "off-shore" developers was another practice which developed. The bottom line was the disappearance of our jobs. It was nice while it lasted. Please do not import foreign Information Technology workers into Israel! Instead, develop training programs in these fields for Israeli youth.

9

 Jul 05, 2016 at 01:28 AM Anonymous Says:

Until the rabbonim tell their yungerleit it's assur not to work, they won't. These people can't make decisions for themselves. They have the emotional level of 6 year olds.

10

 Jul 05, 2016 at 03:45 AM Anonymous Says:

Reply to #1  
Adopt A Job Says:

I think its time for the charedim to jump into the workforce. Times could not be better. Demand for workers are high while supply is low. Right now under the new tal law passed by Lapid, anyone over 24 can work with no army service. (Oh you do have to officially register. So I guess nebach you still have to shtel tzu to the evil tzionim. But no army duty is required) So basically you have great job opportunities and an easy passage to the work force. So whats holding the charedim back? Why is our only answer to alleviate poverty amoungst charedim to "adopt Kollels"? Why not "adopt a job" or "adopt a charedi college"? Lest people argue because torah is the ikkur. Noone denies that you should learn every free second possible. And working is a curse since adam ate from the eitz hadas. But our long standing mesora since moshe rabbeu has been for at-least a large sector of societies to work and learn together with maybe a few who learn forever. However, simpky to have a whole society just learn, remain poor and needy is simplly not under our jewish mesora.

Was the article about the hi-tech industry or about your favorite hobby-horse?

11

 Jul 05, 2016 at 09:38 AM Anonymous Says:

Reply to #9  
Anonymous Says:

Until the rabbonim tell their yungerleit it's assur not to work, they won't. These people can't make decisions for themselves. They have the emotional level of 6 year olds.

Your suggestion that the rabbonim tell the yungerleit that it is C'V "OK to work", are mamash apikorsus.....It is brought down by chazal and basic torah moshe m'sinai that malacha of ANY type by a ben or bas yisroel, is ganz assur and those who violate this injunction are chayav sekilah....period, end of story.

12

 Jul 05, 2016 at 10:08 AM TruthIsIt Says:

How about training the young during the summer(camps for techs & see who is the star).....

13

 Jul 05, 2016 at 11:32 AM Adopt A Job Says:

Reply to #6  
cowdoc Says:

Feel bad for those of you that feel work is a curse. I enjoy working.

I don't enjoy working. I enjoy learning and miss my kollel days. As far as I know work was a cruse that hashem gave to adam. I work because its the will of hashem to support a family and not come on to others, its my moral obligation and I signed a contract stating " I will work". (aka my kesuba)

14

 Jul 05, 2016 at 11:36 AM kenyaninwhitehouse Says:

Remember the Zionists goal is to import non-jews which is what this is about, I cannot wait until us with a mesora take over the government and allow for Yiddisha values to dominate not toeiva, Has-em will not let us starve just like he has not allowed the Arabs to destroy Eretz Yisroel, bec. the zechus of Torah protects the land.

15

 Jul 05, 2016 at 11:37 AM Adopt A Job Says:

Reply to #10  
Anonymous Says:

Was the article about the hi-tech industry or about your favorite hobby-horse?

The aritcle was about two sides of the equation, the hi tech demand and the low end supply of workers due to high unemployment amoungst the arab and cahredi sectors. I am addressing the low supply side which is directly relevant to this article.

16

 Jul 05, 2016 at 11:54 AM Yossi Says:

i spoke to a gerer chusid who told me that 37 yingelat graduated college and applied for jobs in the tech world. Not one single graduate was hired and the reason is because the dont want chareidim. So i dont want to hear that chareidim have to start getting educated. Fist you need to change of culture of hating chareidim. We all know a chareidishe KUP who is filled with Torah and Midos tovas will compete with any secular worker.

17

 Jul 05, 2016 at 01:16 PM Adopt A Job Says:

Reply to #16  
Yossi Says:

i spoke to a gerer chusid who told me that 37 yingelat graduated college and applied for jobs in the tech world. Not one single graduate was hired and the reason is because the dont want chareidim. So i dont want to hear that chareidim have to start getting educated. Fist you need to change of culture of hating chareidim. We all know a chareidishe KUP who is filled with Torah and Midos tovas will compete with any secular worker.

1) I spoke to someone who works with an entrepreneur who does business in EY and there is plenty of opportunities for charedim if they only wanted to work.
2) Those 37 yingerlit, did they approach their jobs like we do in the USA. Do they understand that it means working in a secular society. They must be Ok with internet usage, working with girls who wear pants, no kosher cafteria or minyan in the office. You get x amount of off days. You are responsible to make sure that covers friday afternoons and yomim tovim or you make up the time somehow. How about interviews with secular women? Can they deal with that?
3) I don't deny that due to years of fighting there is a bit of a divide between charedim & seculars . But, many of those issues could be solved by training and passing good laws. Instead of UTJ and Shas busy a whole day with how much more money can our kolleim get. Their #1 priorty should be how can we get charedim to work? How can we split the schism that divides us int he work place. Frankly, Gaffini gives a little lip service towards this issue but its far from the top of the charedi list. The problem is that the charedim have no real will power to tackle the issue

18

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