Netanyahu warns of tech threat to employment, taxes

Prime Minister Benjamin Netanyahu warned on Thursday of lurking dangers linked to the advancement of technologies that could impact on Israel’s labor force and taxation policies in future.

Speaking at the cornerstone ceremony for the Israeli Innovation Center, set up within the Peres Peace House in Jaffa, Netanyahu said that a lack of skilled workers in the high tech industry — which many industry heads and government officials have warned against frequently — may not be the main threat to Israel’s high tech and economic landscape.

As big data and artificial intelligence enable nations to produce more with less, Israel and other countries will have to contend with finding employment for those who see their jobs replaced by machines. “It is not clear what the employment map will be in a world of innovation,” Netanyahu said. “I am not sure we will be able to keep the public at large adequately employed.”

Israel, whose economy has been fueled by its high-tech industry and exports, is enjoying the lowest unemployment levels in decades, with unemployment at 5.3 percent in the first quarter of the year, according to data compiled by the Bank of Israel. The majority of its working population is still employed in traditional industries, with many untrained with technological skills. Others, like members of the ultra-Orthodox and Arab communities, largely find themselves outside the labor market.

High tech industry leaders, analysts and government officials have warned that a shortage of skilled workers is a major threat to the nation’s technology sector, which is expected to suffer from a lack of more than 10,000 engineers and programmers in the coming decade if the government doesn’t take immediate steps, the Ministry of Economy and Industry has said.

Netanyahu said, though, that a lack of skilled workers for the tech sector is a temporary issue that can be resolved by importing expert workers until a new generation of skilled students is formed and new workers are drawn into the field from still untapped resources like the ultra-Orthodox and Arab populations.

“We can also import experts, it is not a disaster,” he said.

Even as more and more people benefit from the high-tech industry, there will still be a majority of people who remain untouched by its fruits, Netanyahu said.

“Today 10 percent of our population enjoys the fruit of high tech,” he said. “And even if we enlarge this to 15 percent or 20 percent, there will still be the remaining 80 percent” that are outside the high tech circle, he said.

To help this population, there will be pressure on the government to raise taxes, he said. And that, in turn, will put Israel at a disadvantage compared to other countries with whom it competes on the technology scene. Higher taxes will curb entrepreneurship and cause companies to set up businesses where taxes are lower, Netanyahu said.

“We will face this challenge very soon,” he said. “The world of innovation and technology, of artificial intelligence and big data will create for all of us very big challenges. The biggest ones for us will be that of employment and taxation.”

The Finance Ministry is already working on a plan to slash taxes for large and mid-size technology companies that operate in Israel.