Netanyahu to head panel to tackle high-tech workers pinch

Economy’s strength depends on tech sector, says Avi Simhon, head of National Economic Council

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

Prof. Avi Simhon, Head of the National Economic Council, addressing the IATI MNC Forum 2016 (Courtesy: Nir Shmul)
Prof. Avi Simhon, Head of the National Economic Council, addressing the IATI MNC Forum 2016 (Courtesy: Nir Shmul)

Prime Minister Benjamin Netanyahu will head an interministerial panel to address the acute shortage of skilled manpower in the high-tech sector, Avi Simhon, head of the National Economic Council, told a conference last week.

The shortfall of manpower could hamper the growth of a sector that has powered Israel’s economy for more than a decade, industry heads, analysts and government officials have warned.

“The strength of the economy is dependent on the high-tech sector,” Simhon said. “We are lacking engineers. It is amazing how much everyone is with you. They are all 100 percent on board in this matter,” he said, noting that the Finance Ministry was also prepared to spend money on the issue.

The panel will be set up shortly, the prime minister’s office confirmed in a text message to The Times of Israel. TheMarker business website reported earlier this month that the government plans to allocate about NIS 750 million ($193 million) to increase the number of engineers by 40% over a five-year period.

Attendees at the IATI MNC Forum 2016 (Courtesy: Nir Shmul)
Attendees at the IATI Multinational Company Forum 2016 (Courtesy: Nir Shmul)

A shortage of engineers and computer programmers was one of the most talked-about issues tackled by representatives of the high-tech industry and multinational tech firms operating in Israel at the annual conference of the Israel Advanced Technology Industries (IATI) Forum in Tel Aviv last week.

With 250,000 workers directly employed in Israel’s high-tech industry, representing 10% of the total workforce, the nation is in need of around 8,000 new workers a year, according to data presented at the conference. And while Israel’s academia churns out around 4,500 qualified people each year, the industry faces a shortfall of around 3,500 trained professionals annually, Shahar Bar-Or, IATI’s education work group leader and a site manager at Sandisk Israel, said. This is reflected in the higher salaries offered in the sector, he said.

Average salaries in the high-tech sector in Israel rose 5% in 2016 compared to the previous year, a report by Ethosia, a human resources company, shows, and demand for workers grew by 8.6%.

In a June report, Israel’s chief scientist at the Ministry of Economy and Industry Avi Hasson warned of a shortfall of more than 10,000 engineers and programmers in the coming decade if the government doesn’t take immediate action. This is mainly because students shy away from studying computer science, math and statistics. The shortage threatens Israel’s high tech industry, which has been a key engine to fueling Israel economy.

The Finance Ministry warned in February that Israel’s high-tech sector has already ceased to be the nation’s growth engine as fewer students graduate with science degrees. In the years between 1998 and 2009 the high-tech sector, fueled by the arrival of highly educated new immigrants from the former Soviet Union, grew faster than the gross domestic product of the country nearly every year. In the five years since, however, it overtook national growth just once, in 2012, the report shows.

This lack of skilled workers is highlighted even more by the burst of activity in the sector, which has seen almost double the number of companies operating locally in the past decade. There are about 1,000 new startups set up in Israel every year, with workers often wanting the challenge of starting their own company rather than joining an existing one, and successful entrepreneurs returning to the market with new ventures.

In addition, international companies, including Google, Apple, Deutsche Telecom and Bosch, have set up research and development centers in Israel, with 278 multinationals operating a total of 327 R&D centers around the country today, compared with about 250 such centers three years ago, data compiled by Tel Aviv’s IVC Research Center shows.

There are a number of steps the government is already pushing to meet this challenge, the Tel Aviv conference was told by Eli Groner, the director general at the Prime Minister’s Office.

Director General of Israeli PM Netanyahu's office Eli Groner, January 26, 2016. Miriam Alster/Flash90)
Director General of Israeli PM Netanyahu’s office Eli Groner, January 26, 2016. (Miriam Alster/Flash90)

These include increasing the number of relevant classes at the universities, with bigger budgets going to these institutions; pushing more high school students to take higher levels of math and sciences; and coming up with plans to tap into the underutilized pool of Arab and ultra-Orthodox workers.

In addition, Groner said the government has made it easier for highly skilled foreign workers to get visa permits, and is planning to attract a greater number of new immigrants relevant to high tech to Israel. One example is the leveraging of Masa Israel, a government-funded program that encourages immigration of Jews to Israel and fosters closer relationships between Israel and the Diaspora through study, internship and volunteering opportunities.

There are some 10,000 ultra-Orthodox workers employed by the high-tech industry, almost 90 percent of whom are women, said Michal Tzuk, director of employment regulation at the Ministry of Labor. The figure represents just 3% of high-tech employees, she said, and there is great potential to enroll more workers from the sector.

Some 1,000 qualified ultra-Orthodox students graduate from engineering studies a year, she said, but most human resources managers still disregard their applications as they generally graduate not from from universities but from special Haredi colleges. “They don’t pass the regular screening process,” she said. “And this is an obstacle.” HR managers should be be instructed to look at their applications in a different light, she said.

Some inroads have also been made into tapping into the Arab sector for high-tech even if they still represent just a very small percentage of the total employees in the sector, said Ziyad Hanna, a VP for R&D at Cadence and a co-chair at the Public Council for Promoting High-Tech in the Israeli Arab society. “The potential is huge and the importance of high-tech in Arab families is growing, with more and more investing in education.”

Since 2012, the Israeli government has set up a number of programs to help Israeli Arabs integrate into the labor market and the high-tech industry, in an effort to boost economic growth and reduce inequality. Just 5.7% of Israeli Arabs are employed in the high-tech industry and only 2% of those are employed in research and development, according to Israel’s Innovation Authority 2016 report.

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