Israeli High-Tech Workers Face Financial Crisis Amid Layoffs and Rising Mortgage Burdens
The Israeli high-tech sector is experiencing a deepening wave of layoffs driven by a weak dollar exchange rate and the adoption of artificial intelligence tools. Since the beginning of 2023, approximately 8,500 employees, about 2% of the workforce, have been laid off, with projections suggesting up to 10% could lose jobs by the end of the year. The Innovation Authority expects layoffs to continue even if the dollar strengthens. By December 2023, the number of unemployed in high-tech doubled to 16,000, with software developers, who make up 60% of job seekers, being the hardest hit and facing longer job search periods than before.
Many high-tech workers who took on significant financial commitments based on previously high salaries now face severe cash flow problems. Families have seen income plummet while fixed mortgage payments have become a heavy burden. For example, senior programmer Dan Bar Ilan, who earned 24,000 shekels net, was recently laid off, reducing his household income from 37,000 to 13,000 shekels against a monthly mortgage payment of 11,000 shekels on a 1.4 million shekel loan. Similarly, programmer Yair Vernana and his engineer wife, who together earned 43,000 shekels, now struggle with a 15,000 shekel monthly mortgage payment after her layoff.
The rise of AI has replaced about 16% of typical high-tech tasks, prompting companies to reduce hiring. Available jobs mainly focus on hardware and infrastructure, which do not match the skills of many laid-off workers. Those unable to find new employment rely on unemployment benefits, which drastically reduce living standards. Salary reductions are stark: a worker earning 30,000 shekels gross now receives about 12,670 shekels net, and someone earning 40,000 shekels gross drops to 13,769 shekels net.
Mortgage repayments have surged due to rising interest rates, especially for those with variable-rate loans. Mortgage advisor Avi Sofer explains that many high-tech workers took loans with two-thirds in variable-rate tracks, which have jumped from near zero to 6.5-7%, increasing monthly payments by thousands of shekels. For instance, Avner and Tamar’s mortgage payments rose by 32%, adding 3,050 shekels monthly, causing significant financial strain.
Experts warn this crisis is not temporary. Industry leaders predict a 25-30% reduction in high-tech employment within a year if exchange rates and policies do not improve. Early withdrawal of severance funds offers immediate relief but risks reducing retirement savings by 35-40% and incurs high taxes. Mortgage advisors recommend tailored solutions such as payment deferrals, refinancing, or leveraging savings to stabilize finances. However, for those with large mortgages on expensive properties, selling and downsizing may be the only viable option to avoid economic collapse.
