‘Start-up nation’ expects no change of course after elections

‘Start-up nation’ expects no change of course after elections

Whether Likud or Blue and White come out on top, businesses expect a continued focus on bolstering Israel’s high-tech sector

The deck overlooking views of Tel Aviv at new headquarters of Start-Up Nation Central (Amir Geron for Start-Up Nation Central)
The deck overlooking views of Tel Aviv at new headquarters of Start-Up Nation Central (Amir Geron for Start-Up Nation Central)

AFP — Having fostered firms ranging from Waze to Wix, Israel’s vibrant high-tech sector has lived up to its “start-up nation” nickname, and Tuesday’s elections are unlikely to cause it to change trajectory, analysts say.

With opinion polls showing Prime Minister Benjamin Netanyahu’s right-wing Likud party battling the centrist Blue and White alliance to decide who will lead the next coalition government, there is no apparent threat to the economic status quo.

Labor, which could be less eager to relax regulatory controls on business, is trailing far behind in the polls and has long since abandoned socialism.

The country has fostered companies such as navigation app Waze, bought by Google in 2013, car tech firm Mobileye, now owned by Intel, and web-publishing company Wix.

Its bustling seaside economic capital Tel Aviv and its suburbs have served as the sector’s beating heart.

Israel has made developing the sector a priority, and the high-tech expertise offered through military service has played an important role.

Military service is mandatory for most Jewish Israelis, and those serving in the army’s elite Unit 8200 for signal intelligence often go on to high-tech careers.

Omer Moav, an economics professor at the Interdisciplinary Center Herzliya near Tel Aviv, says there is little daylight between any of the mainstream political parties.

Omer Moav (YouTube screenshot)

“There is no clear difference in Israel between left and right economics,” he told AFP. “It’s hard to imagine any significant change.”

French credit insurer Coface also saw post-election business as usual in its February risk assessment for Israel.

“Elections are expected to eliminate political stress and uncertainty, and to concentrate more resources on maintaining growth, and fiscal stability and discipline,” it wrote.

‘Competitive market’

The newly minted Blue and White party, led by former military chief Benny Gantz, pledges in its election manifesto to improve public infrastructure and reduce bureaucracy — issues business leaders say must be addressed to sustain high-tech growth.

“We shall work with academia to ensure that Israel is at the forefront of R&D and commercialization of advanced technologies such as nanotechnology and quantum computing,” it adds.

Likud, under four-time premier Benjamin Netanyahu, is committed to a “free economy with social sensitivity” and “a competitive market, reduction in taxes and enlargement of the private sector.”

Netanyahu, a former finance minister, has made economic liberalization a priority and Israel’s economy has posted steady growth under his leadership, though a stubbornly high cost of living remains a serious concern.

Israel’s high-tech industry is seen as a global leader.

Its 7,000 local high-tech firms and dozens of research and development centers of foreign companies employ 280,000 Israelis and make up 12 percent of the business sector GDP.

It accounts for a whopping 43% of exports, according to the economy ministry.

But while success has been apparent, a December report by Israeli NGO Start-Up Nation Central said the sector was not fulfilling its potential, due to a shortage of trained local personnel.

More than 15,000 job vacancies are unfilled.

“Over the past five years, the number of people employed in the Israeli tech sector… has grown from 240,000 to 280,000, but their percentage in the labor force is stagnant at around 8% of the total workforce,” it wrote.

“The required growth will not be possible if the country’s supply of tech workers is inadequate,” the NGO’s head said then.

‘Quality jobs’

The shortfall stems to a large extent from the lack of recruitment among Israeli Arabs and ultra-Orthodox Jews.

Ultra-Orthodox men tend to study mostly religion rather than English, maths or other subjects necessary for a tech career.

Gilad Malach, of the Israel Democracy Institute think-tank, said ultra-Orthodox women tend to be better educated than the men but need workplaces specially suited to religious laws, for example on gender segregation.

Gilad Malach (YouTube screenshot)

Like Israeli Arabs, few ultra-Orthodox men or women serve in Israel’s army, a hothouse for forging high-tech skills, putting them at a significant disadvantage.

As a result, Arabs make up 1.4% of the high-tech workforce and ultra-Orthodox men and women just 0.7%.

Ultra-Orthodox parties held 13 seats in the outgoing parliament — the Knesset — and opinion polls forecast a similar showing this time round.

Malach told AFP that ultra-Orthodox politicians are becoming more aware of the need to equip their constituents for “quality jobs.”

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