One-third of Israeli tech companies are planning on firing employees due to the coronavirus pandemic.
Five percent have already fired workers, and nearly two-thirds froze new hirings, said a survey by Israel’s Viola investment group.
In an unofficial survey of the effects of the virus on the Israeli tech industry, the venture capital firm queried 135 chief financial officers and human resources staffers at tech companies.
The firms appear to be on better footing than other industries, with 55 percent saying they had not seen any effects from the pandemic, but a growing number are seeing an impact on their business. On March 11, only 5% had seen major business consequences due to the outbreak, but on March 15, 33% said they had.
As of Sunday, around half offered voluntary policies for working from home, and half had mandatory, or partial mandatory work-from-home policies. Smaller companies were more likely to offer voluntary policies, at 70%, while larger companies with over 150 employees ordered mandatory policies.
For Israeli tech companies with employees in the US, where government directives are less stringent, most US-based workers were also working from home, with only 16% working as usual.
Seventy-two percent of the firms said they felt well-prepared for an extended period of required work from home, and 59% said they had implemented policies, including virtual meetings, to ensure that employees were actually working from home.
Childcare is a significant challenge for the companies. The majority — 64% — said that they had allowed for shorter work days for parents since schools and daycare facilities in Israel were closed. Twenty-one percent are offering employees compensation for lost days due to childcare, and 9% are taking employee vacation days.
Twenty-one percent of the companies are planning on salary cuts, and 88% have frozen, or are planning to freeze new hires.
Only 11% have not changed their revenue models, a number that is likely to shrink further in the coming week.
Close to half have implemented marketing budget cuts, and one-third were planning to. Sixty-four percent have frozen, or were planning to freeze signings of new vendors or suppliers.
In one bright spot for the companies, 60% have taken advantage of the economic turbulence to buy shekels at a favorable exchange rate. The shekel has become weaker against the dollar in recent weeks. Most startups spend in shekels, but receive revenue and investments in dollars.
While the tech industry has for the most part weathered the storm so far, the virus outbreak in its early weeks rocked Israel’s tourism and aviation industries.
Israel shuttered schools and most businesses over the past week, in a bid to stem the spread of the virus to avoid overwhelming the country’s health infrastructure. The new measures are a blow to Israel’s retail, food, and entertainment sectors. The construction industry is expected to remain largely unaffected.
The Bank of Israel and retail banks announced measures on Sunday to mitigate damage to the economy caused by the pandemic.
The bank will be buying government bonds and offering repo transactions to Israeli financial institutions, using government bonds as collateral. The bank did not specify the size of the planned transactions, only saying it would buy bonds “in the necessary quantities.”
The move is intended to increase liquidity and decrease volatility in the markets, as spending is curtailed by closed businesses, limited movement, consumer fears and plummeting equities.
The bank said it was responding to high volatility in financial markets in Israel and abroad and that the measures will support price stability, government economic policy and Israel’s financial system.
Retail banks will adjust policy to support the business sector and general public following a request from the Bank of Israel. The banks’ newly announced regulatory leniencies are aimed in particular at small and mid-sized businesses, which rely heavily on bank credit.
The banks will offer a delay in mortgage payments for a few months, loans to small and mid-sized businesses that are seeing liquidity problems, expanded digital services for remote transactions, and courier services for customers in quarantine.
The banks are expected to announce additional measures in the coming days, including easing policies on loans, credit, remote transactions, and ATM cash supplies.
The Finance Ministry reportedly predicted that the partial shutdown would cost the economy some NIS 11 billion ($3 billion) in six weeks.
Global markets and the Tel Aviv Stock Exchange plummeted on Monday, despite a massive rate cut from the US Federal Reserve on Sunday.
On Sunday, the Finance Ministry reportedly reached an agreement with employer and labor representatives to provide some NIS 3 billion ($817 million) relief to businesses. Employers pledged to hold off on layoffs until after the Passover holiday in mid-April.
Following the shutdown announcement on Saturday, Israeli retailers immediately placed thousands of workers on unpaid leave. Restaurants will be allowed to continue offering take out and delivery. The construction sector is expected to remain largely unaffected by the directives.
The Health Ministry on Monday reported an additional 42 cases of the novel coronavirus in Israel, bringing the total number of confirmed infections up to 255.
The majority have light symptoms, while 13 are listed in moderate condition and five are seriously ill, the ministry said, adding that 8,325 tests have been carried out.
Viola, founded in 2000, manages over $3 billion in assets and has worked with over 200 tech companies, it said.