High-Tech Employment: Its Sources and Expansion Opportunities

​This study examines changes in the economic environment which might increase the rate of workers employed in the Israeli high-tech sector, who currently constitute around 9% of employees in the business sector, and bring it up to 12 percent. Assuming the average output of high-tech workers continues to be twice as high as that of their counterparts in other industries, such an increase in the rate of high-tech employees will raise the gross business product by approximately 5%, and the GDP by around 3%, based on the assumption that the high-tech sector does indeed incorporate these workers. Hence, in order to explore mechanisms which might increase the volume of employment in the high-tech sector, this study focuses on the characteristics of workers in high-tech industries and in other economic sectors, across different age and population groups.

The analysis of the characteristics of high-tech employees and their comparison to employees in other sectors drew on a database compiled by the Israeli Central Bureau of Statistics, which includes demographic background variables along with data regarding training, education, employment, and income of Israelis born between 1978 and 1985. This data shows that 96% of high-tech employees hail from the non-Haredi (i.e., not ultra-Orthodox) Jewish population, which constitutes less than 75% of the general population. Among high-tech employees, the percentage of non-Haredi Jewish men is 63%, almost double than the rate of non-Haredi Jewish women which is 33%.

Our study finds that an increase of 40% over the next ten years in the rate of STEM graduates among the younger generation, from 11 to 16 percent, would in itself raise the rate of high-tech employees by 1.9 percentage points, with the addition being derived mainly from the group of Jewish men. The forecast for such an increase is deemed conservative, considering the fact that the national objective of a 40% increase in the rate of STEM graduates is supposed to be achieved within just five years (2017-2022).

An increase of around 20% in the rate of high-school graduates taking expanded matriculation (5 study units) in mathematics would lead to a rise of 0.7 percentage points in the rate of high-tech employees in the business sector. This increase stems mainly from the Jewish population, with an almost equal distribution between men and women. According to our study, increasing the wage gap between high-tech employees and their counterparts in other industries by NIS 1,000 per month (about 10% of the average wage gaps in our sample) has a limited effect on the rate of high-tech employees. However, due to data limitations, it is likely that these findings do not fully reflect the effects of earnings on the rate of high-school students who take expanded matriculation in scientific subjects and choose to major in STEM-related subjects. The findings of this study demonstrate that the policy which aims to increase the rate of students who take expanded matriculation in mathematics and major in STEM-related subjects is effective in increasing the rate of high-tech employees, and support its further implementation. In addition, the study identifies Jewish women, as well as the Haredi and Arab population groups, as potential sources for a further expansion of the high-tech workforce.

This paper was written before the outbreak of the COVID-19 crisis and does not include any reference to its possible effects on the high-tech sector.