Israeli Tech Data That Alarmed the Finance Ministry, and the Proposed Fixes

The math behind this crisis is simple. With an average salary of 30,000 shekels a month and an average dollar exchange rate over the past 10 years of 3.53 shekels, each tech worker costs an exporting employer about 8,500 dollars a month. At a dollar rate of 3 shekels, that same worker costs 10,000 dollars a month, 1,500 dollars more. Ronen Nir, a partner at the PSG venture capital fund, calculated from these historical figures that, given 400,000 employees in the high-tech industry, the sector’s additional labor cost is 21 billion shekels. That is the cost of employing about 40,000 workers, or, less euphemistically, the number of jobs already under threat of being moved out of Israel in the name of cost savings. In practice, the dollar is already below 3 shekels, while the average salary jumped, according to data published last week, to 38,000 shekels, so the added burden is even greater and the number of wavering jobs is larger. Although the dollar strengthened at the end of the week after sharp declines on Wall Street and is already trading around 2.96 shekels, everyone in the economy, including the Bank of Israel, admits that this time the situation is not entirely under the central bank’s control. The exchange rate is now influenced more than ever by the Trump administration’s desire to weaken the U.S. currency, by the rally on Wall Street and by Israel’s lower risk premium. As proof, the dollar has weakened by double digits not only against the shekel, but has done so consistently since January 2025, the start of Trump’s second term in the White House, also against all major currencies, including the euro and the Swiss franc. Nir made this alarming calculation at the beginning of May, shortly after the dollar fell below 3 shekels for the first time, but only a month later, and after a quarter-point interest rate cut that barely affected the Israeli currency, did the Finance Ministry realize that this was not a temporary, isolated issue, but a real threat to the growth engine. This is no longer just “pampered” high-tech, but the economy as a whole.

On Wednesday, senior Finance Ministry officials, including Accountant General Michal Abadi-Boiangiu, Budget Department head Mehran Prusner and Chief Economist Shmuel Abramzon, held an emergency discussion with senior leaders from Israel’s local tech industry, at the end of which it was decided to set up a team to formulate recommendations for immediate implementation to neutralize the impact of the strong shekel. How real and painful the problem is across the full depth and breadth of local high-tech can be seen from the impressive list of participants on the industry side. According to data obtained by Calcalist, the Zoom call included Michal Braverman-Blumenstyk, Microsoft Israel’s head of research and development; Adi Soffer-Teeni, CEO of Meta Israel; Ofir Ehrlich, co-founder and CEO of EON, one of Israel’s hottest unicorns; Hedva Ber, former supervisor of banks and now deputy CEO of eToro, a fintech company listed on Nasdaq; as well as venture capital representatives including Adam Fisher, managing partner at the international Bessemer fund, and Erich Klienstein, co-founder of Glilot Capital, which specializes in investments in cyber companies. The preparations for the discussion were led by the Israel Advanced Technology Industries Association (IATI) and its CEO, Karin Meir Rubinstein. Also taking part were Dror Bin, CEO of the Innovation Authority, representatives of the Growth Companies Forum, which brings together many large public and private tech companies, and the High-Tech Association within the Manufacturers Association, which presented a company survey exposing alarming figures.

According to the High-Tech Association survey, conducted during May among dozens of companies employing a combined 12,000 workers, an overwhelming majority are preparing for a profit erosion of 15% or more, and as a result for layoffs and moving part of their activity abroad. These are companies of different sizes, from the large multinational firms to young startups. Precisely because these are different kinds of companies at different stages of their life cycle, the solutions also need to be varied. Calcalist reported this week on the negotiations already under way between Nvidia and Google and the Finance Ministry over the possibility of paying corporate tax in dollars. However, such a solution is not relevant for a startup that is still posting losses and paying almost no direct taxes, but suddenly finds itself with enough cash for a much shorter period than planned. The broad agreement was that the solutions must be implemented quickly and therefore cannot involve legislation, certainly not a few months before elections.

Erich Klienstein, Glilot Capital, said: “We need to act quickly because the layoffs will be immediate and the relocation of jobs will be very fast, otherwise there will be a tsunami here. We need to start raising more money now, urgently.” “We need to act quickly because the layoffs will be immediate and the relocation of jobs will be very fast, otherwise there will be a tsunami,” Klienstein of Glilot Capital, who is usually very restrained in his remarks, told Calcalist. Glilot has invested in dozens of cyber companies, which in theory do not have a financing problem because they belong to a hot sector, but in practice they too are in trouble: “If the entire industry raised 15 billion dollars in 2025, that amount now shrinks retrospectively to 12 billion dollars, which means we need to start raising more money now, urgently.” Klienstein suggests immediately reactivating the mechanism built by the Innovation Authority during the coronavirus period and again at the start of the war in 2023, grants that later turn into loans repaid as a percentage of revenue. “This time a 400 million shekel emergency fund, as there was before, will not be enough, and we think at least 1 billion shekels should be allocated for this,” he explains. The grants to startups would cover a fixed percentage of monthly expenses, and once they reach significant sales they would begin repaying the grant money as a loan.

Ahead of the discussion, the High-Tech Association prepared a position paper that includes a series of relatively creative proposals, not just calls for intervention by the Bank of Israel in trading or for an interest rate cut. Among the proposals raised were a municipal property tax discount in Israel for major exporters, and relief in the cost of the tax credit points paid by employers. That way, employees would continue to receive the same net salary, while the cost to the employer would decline. The association estimates that additional measures will be raised in talks with the Finance Ministry that would allow payments to the state to be reduced in order to lower shekel-denominated costs.

Alon Ben-Tzur, chairman of the High-Tech Association and CEO of Bynet Communications, said in a conversation with Calcalist: “The very fact that the meeting took place this week, at the initiative of the Finance Ministry, is already a positive signal, and now the team must act quickly to make immediate decisions.” “The survey we presented at the meeting even surprised us with truly worrying data. The average salary figures in high-tech published last week, which showed a sharp jump, are also a cause for concern, because what is pulling them up are the salaries paid by the large global companies operating here. They are willing to pay a lot for a relatively small number of workers who develop the truly critical and complex things, but at the same time they are moving many roles that require simpler development out of here. In addition, this also stems from a decline in the hiring of junior workers.” Ben-Tzur adds a warning that “a dangerous situation is being created in which knowledge is being moved out of Israel, and this will also harm the additional circles beyond the high-tech employees themselves. In other words, it will spill over into damage to other industries in Israel.”

The strong shekel is the final straw that could lead to deep damage to the local high-tech sector, which has already begun, for the first time in its history, to move development jobs out of Israel over the past year. This follows three years of turmoil that began with internal uncertainty stemming from the attempt at judicial overhaul and deepened with the outbreak of the war, long reserve duty periods and the halt to flights. Data from the Aaron Institute, later reinforced by the Innovation Authority’s annual report published last week, show that in 2025 there was, for the first time, a decline in the number of R&D jobs in Israel. This comes after an increase in the number of new startups being registered outside Israel, the share of which reached more than 50% last year, compared with only 30% over the past decade. The participants in the Zoom call with the Finance Ministry were left with the impression that this time there is also an understanding of the situation in Jerusalem and a genuine sense of urgency. The assessment is that after the Budget Department saw the phenomenal tax revenues from the Wiz, Armis and CyberArk exits, which reduced the deficit despite the enormous defense expenditures, the fear of future lost revenue became more tangible.