The Information Technology Landscape in Israel

 

IT Labor Market

 

According to the Israel Trade Commission there are over 2,000 established high tech companies with an annual growth rate of 200-300 new start-ups. The success of the Information Technology industry is a direct result of the Israel’s superior educational infrastructure, compulsory military service, immigration and absence of significant brain drain in the nation. (8) 

Israeli educational institutions are ranked highest in the world and have produced a workforce that leads the world in the number of scientists and technicians. This young educated population has made Israel an attractive place for multinational tech-firms, such as Motorola, Intel, Digital Equipment, IBM and Microsoft to invest heavily creating jobs for . This has lead to a workforce comprised 25% technical professions leading the world. (8)

Due to the severity of the Israeli security situation over the years, all men and woman over 18 years old are obligated to serve a mandatory service in one of the Israeli security organizations. Men have to serve three years, while woman serve 18-21 month although the woman mandatory service is much more loosely enforced. (IDF) This compulsory military service provides “practical technical experience and stresses the importance of effective teamwork.” Many of the high-tech and entrepreneurial teams previously served together in IDC units. (8)

The large number of educated Russians that immigrated into Israel in the early 1990's, contributed significantly to the field of science, engineering and technology. Half of the total Russian immigrant population have university degrees. (8)

Cyclical Human Capital

One problem that many nations in the middle east region and other developing areas in the world face is brain drain. This is the phenomenon of trained citizens leaving there home country in pursuit of career opportunities abroad primarily in the developed world of the United States and Europe. Israel has a cyclic pattern in reference to the phenomena, many of Israel lead engineers, technicians and managers have left  Israel to pursue their careers  international experience in their trade and international business relations. Israel is fortunate that many citizens return home to Israel and apply what they have learned to the local market place, this had prevented massive brain that other countries are facing in the region and else where in developing areas of the world.

In 1997, the unemployment rate increased to 7.7%. This trend continued during the first six months of 1998, and unemployment increased to 9.4% in the second quarter of 1998. Unemployment today, is different than the higher unemployment rates Israel experienced during the years 1990-1994. Unemployment at that time was prompted by very rapid employment growth and even faster growth of the labor force. The situation today is different as Israel experiences relatively slow labor force growth and an even slower rate of Job creation. There are no immediate solutions to unemployment. The strong correspondence between the rates of economic growth and employment growth leads to the conclusion that the long term solution is to encourage growth. (37)

Source: State of Israel Ministry of Finance (37)

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