Losing Momentum? Israeli Hi-Tech Needs Urgent Increase In Number Employed, Says Israel Innovation Authority

Israel’s hi-tech industry is nothing short of a success story for the country, as it earns recognition on a global scale. Still, this success is missing one key ingredient: so far it is not trickling into other areas of the economy. This is according to the Israel Innovation Authority, which warned of changes that need to happen in its 2017 report.

According to the report, examining trends and characteristics of the Israeli hi-tech sector, the major challenge facing the industry is not why the striking achievements in hi-tech aren’t flourishing, but rather, why the rest of the Israeli economy doesn’t follow suit.

The report says just 8.3 percent of all salaried employees in Israel are in the hi-tech industry. And while the average monthly hi-tech salary has grown to an average of ILS 21,000  ($5,986) between 2005 and 2015, the average national salary  less than half at just ILS 9,800 ($2,793.)

Innovation via Israel innovation’s Facebook Page

According to the Israel Innovation Authority, the main solution is to increase the amount of hi-tech employees in Israel. The goal is to double the current number of employees in Israeli hi-tech, bringing the total number to 500,000.

Israeli innovation at its peak 

Still, Israeli hi-tech is an unprecedented success story enjoying a period of consistent growth, the Israel Innovation Authority report says. Israel is first in the world in R&D investment and in venture capital investments as a percentage of GDP, it reports. Six hundred new startups are established every year and there are 307 multinational R&D centers in Israel, including Intel, Google, IBM, and Apple.

In 2016, NoCamels reported that Israel ranked second in innovation in World Economic Forum’s Global Competitiveness Report for 2016-2017. While it ranked 24 overall, it’s significant strengths were in innovation, venture capital, and university-industry R&D collaboration.

The World Economic Forum reported that Israel has about 4000 startups, and raises venture capital per capita at two-and-a-half times the rate of the US and 30 times that of Europe.

SEE ALSO: World Economic Forum: Israel Is 2nd Most Innovative Country In The World

“The 2017 Innovation Report published by the Israel Innovation Authority encompasses a range of achievements and challenges faced by the Israel innovation industry and presents a roadmap for future development,” said Israeli Minister of Economy and Industry, MK Eli Cohen.

SEE ALSO: The Other Silicon Valley: The Role Of Multinational Companies in Israel’s Startup Ecosystem

The value of investing in economy, not just tech

“The Israeli model of innovation is largely based on creating added technological value in startups and R&D centers.  The Israeli innovation ecosystem, however, is still in the first stages of developing efficient mechanisms for seizing the economic value emanating from the technological value created in Israel,” Director of the Israel Innovation Authority Aharon Aharon said in a statement.

To bring the current number of people employed in the hi tech industry (270,000) to half-a-million people within a decade, the report suggests a number of steps, including expanding spheres of employment in hi tech — including integration of women, members of the Arab sector, Ultra-Orthodox Jews and engineers above the age of 45 and developing other sectors of innovation outside software, computing, and communication, with an emphasis on the life sciences.

Handshake. Courtesy of Ministry of Economy and Industry

Other strategies taken to focus on shifting the success of Israel’s hi tech sector to other areas of the economy include nurturing human capital for hi-tech through “coding boot camps”, promoting innovation in manufacturing industries, and increasing the economic value of R&D activity of multinational companies in Israel.

The Israel Innovation Authority was established to provide effective and hi quality services for the Israel innovation ecosystem. Formerly known as the Office of the Chief Scientist of the Ministry of Economy, it operates for the benefit of the country’s innovation ecosystem as well as the Israeli economy.  It is responsible for the country’s innovation policy, distributes grants to companies, and approves the creation of support programs, innovation labs, biotech incubators, coding boot camps and more.

The first innovation report was created under the Office of the Chief Scientist in 2015.  Since then the annual report has presented the accomplishments of the Israel’s innovation scene and provided strategies to combat some of its challenges.

Photo: Innovation Israel, Ministry of Economy and Industry