By Hili Yacobi-Handelsman
For the first time in Israel’s history, high tech exports accounted for more than 50% of the country’s exports in 2021, now standing at 54%, while in another first, more than 10% of all Israelis now work in the high-tech industry, according to a report by the Israel Innovation Authority titled “The State of High-Tech 2022.”
According to the report, Israel is a global leader in the percentage of citizens working in the high-tech field with 362,000 in the industry who represent 10.4% of the country’s workforce.
To compare, the percentage of the overall workforce in high-tech in Ireland is 9.2%, in Sweden 5.7%, in Great Britain 5.5%, in Germany 5.3% and in the Netherlands 4.3%. The number of high-tech workers in Israel increased by 8% in the past year (representing 27,000 new workers), while that number was just 1% in all other industries.
However, government investment in future research and development in Israel is the lowest among OECD member countries.
Meanwhile, Israel is ranked first among OECD countries in research-and-development expenditure in relation to Gross Domestic Product but is ranked last in the terms of the percentage of government spending on research and development out of all of its expenditures in the field. Additionally, Israel slipped to 15th place in the Global Innovation Index’s rankings for 2021, compared to 10th place in 2019.
According to the report, in the past year, the Israeli high-tech industry raised more than $100 million 88 times, although publicly traded Israeli high-tech companies in 2021 lost 10% of their worth on the NASDAQ. Israeli startups raised a record $27 billion in funds in 2021—more than doubling the total from the previous year.
Israeli high-tech is still lagging in terms of representation from all sectors of the population. There was a 6% drop in the number of haredi high-tech workers in 2021, and only 200 new workers entered the industry from the Arab sector.
Some 19% of Israelis ages 30 to 34 are employed in tech positions in all branches of the market.
One-third of the high-tech companies in Israel, which employ around 25% of all workers in the industry, are located in Tel Aviv. Jerusalem is mostly home to medium- and small-sized high-tech companies, while Haifa is home mainly to large, multi-national corporations. Beersheva, in southern Israel, is the fastest-growing city in terms of startup companies.
Ami Appelbaum, the chief scientist and chairman of the board of Israel Innovation Authority, told Israel Hayom: “We see the current year as a record year of high-tech activity in Israel with a tremendous capital flow of $27 billion and companies showing growth.”
Still, he said, “Israel can’t bury its head in the sand and expect that, without long-term investment in high–tech, the economy’s main export sector will continue to lead in the global arena. It is evident in the country’s decline in the Global Innovation Index and in indices that examine the resilience of academia. Past national investments allowed Israel to claim its position as a global leader in the area of innovation, and the country must continue to maintain this position.”
This is an edited version of an article that first appeared in Israel Hayom.