Israeli High-Tech Boosts Output With Fewer Workers Amid Shifting Job Market

Israel's high-tech sector is demonstrating increased productivity and economic output, even as job growth stagnates and a slight decline in employment is observed. In July, the number of salaried positions in the industry stood at approximately 397,300, a 0.3% decrease compared to the previous year. This trend marks a significant shift from previous years when the sector experienced robust annual employment growth of around 6%. While the total number of high-tech jobs reached about 400,000 in 2025, the growth rate has slowed considerably to just 2.3%, with a year-on-year decrease noted in July.

Despite the slowdown in job creation, the economic performance of the sector remains strong. High-tech's contribution to the economy reached approximately 352 billion shekels last year, an 8.2% real increase. Productivity per worker has also climbed to about 827,000 shekels annually, a 6% rise. This widening gap between economic activity growth and workforce expansion is partly attributed to the integration of artificial intelligence (AI) and new development tools, which enable engineers to accomplish more with less time and potentially fewer personnel.

The average salary in the high-tech sector saw a 6.2% drop in July, falling from 36,584 shekels in June to 34,301 shekels. However, this figure requires context, as monthly salary fluctuations are influenced by bonuses and grants. Even after this decrease, the average salary remains nearly 2.4 times higher than the national average, with specific fields like R&D and computer programming showing high average salaries.

The employment landscape is also evolving, with a noticeable difference between hardware and software companies. While hardware firms continue to hire, some software companies are reducing their workforce. Demand remains high for specialists in AI, cybersecurity, chips, and infrastructure. Entry-level positions and general roles are becoming more challenging to secure, contributing to a decline in demand for computer science studies as companies prioritize experienced hires capable of leveraging AI tools.

Furthermore, there's a geographical shift occurring, with the proportion of employees working in Israel for private Israeli high-tech companies decreasing from 69% in 2019 to 62% this year. A significant portion of expansion is moving to the United States and other operational hubs, including development and management roles. In essence, the Israeli high-tech industry remains a powerful economic engine, but its labor market is adapting to a new reality of increased output per employee, reduced need for mass hiring, and a greater emphasis on specialized skills.