For years, Tel Aviv’s silicon valley has been the place to go for cutting edge start-ups, but now the region is running out of employees necessary to continue.
There is an alarming lack of engineers, technicians and even doctors and a brutal fight for skilled employees. Some start-ups are having to look overseas and leaving the Promised Land, or try bringing in new staff.
Israel’s chief scientist, Avi Hasson, fears that over the next decade the country will face a shortage of about 10,000 engineers and programmers in a market that currently employs 140,000. He said that the issue of skilled and available manpower is the main barrier to growth and competitiveness in the field of high tech.
The industry, which sprouted from an advanced military and flourished with state backing, became a major growth engine and investment magnet for Israel.
Some of it has been the arrival of international companies which have been buying up start-ups and poaching staff. Facebook, Google and others can make offers 50 percent above market and equity packages that are very lucrative.
To make matters worse Israel’s population is getting older and a chunk of the population – the Arab and the ultra-Orthodox Jewish minorities are not getting the required eductation levels. Combined, Israeli Arabs and ultra-Orthodox Jews make up about 30 percent of the population.
University graduates in maths and computer science fell to 1,600 in 2008 from 3,000 in 2005. The figure has recovered, but not returned to prior levels. Israel is ranked 17 among the 34 members of the OECD in the ease of finding skilled workers.
Tech companies prospered for years by tapping into the skills of workers trained in the military or intelligence sectors and start-ups benefiting from tax breaks and government funding. But those are drying up.
Two years ago Israel lost the top spot it held for more than a decade among the OECD when it comes to investment in research and development, mainly due to a steep drop in government investment. South Korea is now top of the tree.
Unlike many countries, it is really difficult to bring in foreign workers into the country. Some Israeli’s ironically say that getting a work permit is harder than to making peace in the region.
In the 1990s, the influx of one million immigrants from the former Soviet Union helped fuel Israel’s high-tech boom. Today about 30,000 people arrive annually, but it is not enough to meet the demands of the growing industry.