AI Drives 18,000 Job Cuts in Israeli High-Tech Despite Slight Employment Uptick

The Israeli high-tech sector has seen a net loss of approximately 18,000 jobs since February 2026, despite a modest increase in employment in June. According to a report by Jonathan Katz and economists at Leader Capital Markets, the number of employees in the sector rose from 421,000 in May to 426,400 in June, but remains significantly below the pre-war level of 444,600 in February. This represents a 4.1% decline in workforce size over the period.

Leader Capital Markets attributes this moderate contraction primarily to the integration of artificial intelligence (AI) technologies, which are reducing the need for human labor, rather than to currency fluctuations. Although the Israeli shekel weakened after May, the wave of layoffs has continued, indicating a deeper structural shift in the sector’s workforce composition.

Several major companies have announced significant layoffs linked to AI adoption. Monday.com cut about 620 jobs globally, with over half of those cuts (around 350) in Israel, citing organizational restructuring to blend human work with AI agents. Wix laid off nearly 1,000 employees (about 20% of its workforce) in May, attributing the move to both the strong shekel and AI advancements. Rapid implemented organizational changes including closures and layoffs of dozens to over 100 employees, with CEO Erik Stillman stating the company is now "operated by AI." MyHeritage also reduced its workforce by approximately 15% (around 75 employees) in July.

While the strong shekel has affected profitability for companies earning in dollars but paying salaries in shekels, it mainly accelerated the ongoing AI-driven transformation. Software firms are increasingly able to develop, test, market, and support products with fewer employees, shifting investments toward AI engines and new roles. The slight employment increase in June may reflect short-term fluctuations rather than a reversal of the trend. The traditional link between revenue growth and workforce expansion in Israeli high-tech is weakening as AI reshapes the industry.