Israel start-up czar says lack of workers is threat to high-tech scene

Eugene Kandel, former head of the National Economic Council, urges country to better prepare women and others for jobs in the industry

Shoshanna Solomon was The Times of Israel's Startups and Business reporter

An ultra-Orthodox man enters the Intel high-tech compound in Jerusalem. (photo credit: Miriam Alster/Flash90)
An ultra-Orthodox man enters the Intel high-tech compound in Jerusalem. (photo credit: Miriam Alster/Flash90)

Israel’s start-up ecosystem will suffer from a lack of skilled workers over the next ten years unless steps to encourage women, Arab and ultra-Orthodox workers are quickly implemented, Prof. Eugene Kandel, a former head of Israel’s National Economic Council and chief executive officer at Start-Up Nation Central, a nonprofit organization, said in an interview.

Israel’s “rather unique innovation ecosystem creates for Israel a presence on the world stage,” Moscow-born Kandel said. “If you take that ecosystem out, Israel is ignorable, because it doesn’t produce much that cannot be produced cheaper or more efficiently by other countries.”

One of the main challenges to Israel’s high tech industry today is finding skilled workers, as fewer students graduate with science degrees, the Finance Ministry said in a February report, warning that Israel’s high tech sector has already ceased to be the nation’s growth engine. Karnit Flug, governor of the Bank of Israel, has cautioned that a “marked slowdown in the effective schooling of the entire population is expected in coming years,” and the quality of the education is also relatively low, which does not bode well for the skills of workers joining the labor market in the next few years.

Unlike other countries, Israel does not have relative advantages “other than human capital and our innovation and creativity,” Flug said at the Eli Hurvitz conference on economy and society held in Jerusalem by the Israel Democracy Institute in May.

Eugene Kandel (Miriam Alster/Flash90)
Eugene Kandel (Miriam Alster/Flash90)

There is no assurance, therefore, that Israel’s start-up ecosystem will continue without some “tending,” Kandel said. Steps to encourage more students to take up science studies are already in place, but it will take another 10 years before the impact of these plans are felt, he said. “We need to come up with solutions for now,” he said.

Kandel chaired the Hurvitz conference together with IDI’s president, Yohanan Plesner.

In the immediate term the government must identify pools of people it can access quickly — women, Arabs and ultra-Orthodox citizens, who today are at the sidelines of the nation’s high-tech economy and workforce, and train them with new skills, Kandel said.

“You can do it in a very short period of time, six to 12 months, and bring them into the industry,” he said. “There are steps being taken. But there needs to be a much more concentrated effort using technology to speed it up and lower the cost.”

A high tech company that employs ultra-Orthodox women in Modiin Illit, 2009. (photo credit: Abir Sultan/Flash90)
A high tech company that employs ultra-Orthodox women in Modiin Illit, 2009. (Abir Sultan/Flash90)

In the longer term, the government will have to counsel and guide students toward science studies, both at university level and also in school, he said, as well as create role models to aspire to.

Kandel, who has also served as economic adviser to Prime Minister Benjamin Netanyahu, was appointed as Start-Up Nation Central CEO in October 2015. The organization, which aims to connect global companies and governments to Israeli technology, was inspired by the 2009 best-seller, “Start-Up Nation: The Story of Israel’s Economic Miracle,” written by Saul Singer and Dan Senor, who are among the institution’s board members.

“The world is going through a very serious change,” Kandel said. “Whether in China or the US, you have to innovate, because if you don’t someone else will. And then you are the one who is going to be buying their product, instead of them yours.”

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