High-Tech Sector as An Engine of Recovery From COVID-19 Crisis

The global economic crisis in the wake of the COVID-19 pandemic creates challenges and difficulties which the Israeli economy must overcome before it can return to growth and prosperity. As of now, it appears that the high-tech sector took a relatively small hit as a result of the COVID-19 crisis. During 2020, capital raising volume reached an all-time high of 10.2 billion USD, total high-tech export remained stable, the rate of furloughed employees was below 1%, and employee layoff rate was 7% - the lowest in comparison to all other industries. The enduring performance of the high-tech sector, and the steady demands in this sector, indicate its capacity to contribute to overall economic recovery.

To examine how the high-tech sector can contribute to recovery of the Israeli economy from the COVID-19 crisis, with an emphasis on its impact on employment, we analyzed administrative data gathered by the Israel Central Bureau of Statistics (CBS) regarding people born between 1970 and 1995 who are employed in high-tech and other sectors, and conducted around 20 semi-structured interviews with human resources (HR) managers of high-tech companies, senior role holders in the high-tech sector, and policymakers. Our analysis examined whether and how the HR needs of various companies within the high-tech sector can be met by the human resources currently available in the Israeli economy, thereby increasing the employment potential of the Israeli high-tech sector, while highlighting occupations which provide peripheral support to core technological positions. In light of the data indicating the high quality of the workforce employed in the high-tech sector, as well as the high percentage of high-quality workers without an academic degree in tech-related fields, who nevertheless earn significantly higher wages compared to employees in all other industries, our premise is that high-tech companies which currently employ a high percentage of workers with tech-related academic degrees have a potential to take in employees holding academic degrees which are not tech-related, or those without an academic degree, who have been laid off or furloughed during the COVID-19 crisis, in order to develop and evolve into a mature company. Specifically, this refers to high-quality workers who previously had not been employed in the high-tech sector, but may consider such a career shift as a result of the negative impact of COVID-19 crisis on employment opportunities in some other industries.

Our findings show that in sectors other than high-tech, and among the unemployed who were ousted from employment in the wake of the crisis, there are according to our estimation between 43,000 and 104,000 high-quality workers, at least some of whom may have the potential to successfully integrate into the high-tech sector. Furthermore, we found that between 2010 and 2017 the high-tech sector exhibited a higher rate of increase in the wages of workers with non-tech-related academic degrees, in comparison to the rate of increase in the wages of workers with tech-related academic degrees. This trend indicates excess demand for workers with academic degrees in non-technological fields, and the potential for their assimilation into the industry.