Israeli High-Tech Unemployment Hits Record High Amid AI Industry Shift

Israel's high-tech sector is experiencing a historic surge in unemployment, reaching approximately 16,300 jobless individuals as of May 2024, more than double the 7,700 unemployed in 2019, according to a report released by the Employment Service on Tuesday. The majority of those unemployed (around 60%) are relatively new to the industry with up to four years of experience, including 31% who are juniors with less than two years in the field. Although entry-level unemployment remains a challenge, its share among job seekers has actually decreased compared to 2023.

The report highlights a significant rise in unemployment among more experienced workers, particularly those with five to eight years of experience, whose unemployment rate has increased by about 138%, and those with over eight years, whose unemployment has surged by 181%. This trend is especially notable in deep-tech sectors, where demand for skilled workers remains high.

Overall, the unemployment rate in the innovation sector has climbed to roughly 11%, up from 5.78% in 2019. Despite this, the sector continues to grow, employing around 404,000 people in 2024 compared to 213,000 in 2012 and 396,000 in 2023. The Employment Service attributes much of the unemployment increase to the rise of artificial intelligence (AI), noting a strong correlation between AI adoption and the growing number of job seekers in high-tech since the launch of ChatGPT in November 2022.

Dr. Tal Aspir, AI lab manager at BDO, emphasized that while AI is often blamed for layoffs, other factors such as rising interest rates, currency fluctuations, and geopolitical risks also impact the industry. He noted that only about 20% of organizations fully implement AI in production, and most use AI as a supportive tool rather than a replacement for human workers. Aspir warned that the perception of AI as a job killer is causing a decline in computer science enrollments, although academia is adapting by teaching AI-enhanced development skills.

Aspir concluded that AI is transforming job roles rather than eliminating them, shifting programmers from basic production tasks to higher-level development and oversight. Employers currently seek workers who can collaborate with AI, not be replaced by it, underscoring the evolving nature of high-tech employment in Israel.