AI Disruption Threatens Israeli Workforce and Economy, Experts Warn

Dori Cohen, 25, recently lost his job as a software tester at a high-tech company, following his father Abraham's dismissal three months earlier from an administrative operations manager role at another tech firm. While Dori remains optimistic and is enrolling in courses to stay relevant, Abraham, nearing 60, faces a harsher reality. He explains that despite earning 30,000 shekels monthly for his extensive experience, he was replaced by a junior employee earning a third of his salary who uses artificial intelligence effectively. This scenario reflects a broader challenge for older workers in Israel adapting to rapid AI-driven changes in the labor market.

A recent 2025 labor market report highlights a troubling forecast: by 2030, approximately 12% of Israelis aged 50 and above may be unemployed. AI is not only replacing jobs but also rapidly altering required skill sets. Workers aged 40 to 60 who do not update their skills risk long-term unemployment and permanent exit from the workforce. Research shows that older workers face prolonged joblessness, with employers favoring younger, cheaper employees, turning temporary unemployment into forced retirement.

Although the Israeli government offers some training programs, including free introductory AI courses on the national digital platform Campus IL and targeted courses like "AI Systems Implementer," economist Ram Ben Avi criticizes the low investment in professional training, only 0.07% of GDP compared to the OECD average of 0.11%. He warns that the state’s reluctance to invest significantly in retraining older workers results in higher costs from unemployment benefits and lost tax revenues, potentially amounting to tens of billions of shekels over a decade.

Ben Avi also points out structural flaws in the training system, which is designed mainly for career changes rather than updating existing professional skills. Older workers like Abraham need skill upgrades within their current fields, but most government courses focus on new professions or basic AI skills without clear employment pathways. Private sector courses vary widely in quality and cost, from a few hundred shekels for basic online classes to up to 20,000 shekels for comprehensive programs.

Comparatively, countries like Singapore and the UK provide substantial subsidies and support for mid-career training, including guaranteed job interviews and living stipends. The EU mandates AI training for employees working with such systems. Israeli institutions like the State Comptroller and Bank of Israel emphasize adult education as crucial for boosting employment and productivity. Ben Avi concludes that failure to address this issue threatens Israel’s education system, economy, and social cohesion in the coming decades.