21 months of economic crisis that began with a hike in interest rates and continued with the judicial reform legislation and then the war should have had Israel’s tech industry on its knees. But new research seen by “Globes” reveals that in 2023, Israel’s tech sector continued to expand with salaries rising for most professionals, or at least not falling.
The research, by tech recruitment services company Ethosia, found that the average salary in Israel’s tech sector rose 3% in 2023 to NIS 30,800, up from NIS 30,000 in 2022. In 2021, when Israel’s tech industry was at its peak with large financing rounds and Wall Street IPOs, the average salary was NIS 29,100.
Which jobs have seen the biggest gains?
A breakdown by positions found that many employees saw their salaries remain unchanged, while others enjoyed a continued rise in their salary slip, despite the crisis. The largest increase in salaries (3.7%) was registered by the senior managers in the industry, with an average monthly salary that reached an all-time high of NIS 54,100, about NIS 10,000 higher than in 2020. Also hardware engineers and software engineers (full stack engineers – specialized programmers in all the complex development tasks) enjoyed an average increase of about NIS 1,000 in their monthly salary in 2023.
On the other hand, project managers, operations and sales employees, saw their salaries remain unchanged last year, after several years of rises. Even human resources managers saw salaries stay unchanged, despite the large fall in hiring and the massive reduction of jobs in 2023. The average salary in the field was NIS 25,500, similar to 2022, despite the cut in the number of jobs from 23,000 in 2022 to 12,700 at the end of last year.
The research data does not leave Ethosia CEO Eyal Solomon optimistic. He said that the pace of salary increases in high-tech has slowed down and the increases over the past year were cosmetic. “The salary increase rate between 2022 and 2023 was 5%-10%, and this year we see for the first time in a while which areas suffered decreases in real salaries due to the increase in the price index, which was greater than the rise in salaries. Therefore, this is a kind of cosmetic correction and not a real increase.
The war has increased employees’ concerns
The research also found that at the end of 2023, out of the overall jobs in the industry, 4,900 new jobs were opened by startups and the rest by medium-sized and big companies – down from 6,300 startup jobs in 2022.
At the same time, the considerations behind the decisions of those looking for a new job in the industry, or those who stick to an existing job have changed. A survey by Ethosia of 850 job seekers found that the majority of respondents (85%) defined “employment stability” as a key consideration. The second consideration was “the company’s impact,” which used to be in first place). Hybrid work options was third and the salary was fourth consideration.
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The proportion of employees who voluntarily left the workplace fell in 2023 to 9% of all employees in the industry, according to Ethosia, down from 13% in 2022 and 11% in the peak year of 2021. However, the figure is still higher than during the Covid pandemic in 2020, when the rate of voluntary departure from high-tech was only 6%. Solomon said that the war had a dramatic effect on the proportion of workers who left voluntarily and that the timing of the sampling, which was carried out at the end of the year, affected the percentages shown. “If the survey had been conducted in August, we might have found even 15% of employees who voluntarily left their jobs.”
Solomon added that if in the months leading up to the war the rate of voluntary departure was higher, in the last quarter of the year it dropped to 3%. “Even if everyone was in the reserves or if additional explanations can be provided, the annual percentage of leaving jobs is completely affected by the fall in the months of the war,” he says. “We see what one dramatic quarter can do to the business and economic results of Israel’s high-tech industry as a whole.”
Danny Byrne, a senior research fellow at the SNPI Institute for Policy and Research in the field of innovation and technology, claims that in the past employees left voluntarily to move to another company. “In contrast,” he clarifies, “now there are fewer places to move to. There are fewer startups and far fewer opportunities. In periods of prosperity, there is a much greater willingness to take risks and join startups that are at the beginning of their journey, and the likelihood that the latter will succeed in raising money was also higher.”
Start-Up Nation Policy Institute (SNPI) senior policy fellow for innovation and technology Danny Biran claims that in the past employees left voluntarily in order to work at another company. In contrast,” he explains, “now there are fewer places to move to. There are fewer startups and far fewer opportunities. In periods of prosperity, there is a much greater willingness to take risks and join startups that are at the beginning of their journey, and the likelihood that the latter will succeed in raising money was also higher.”
Despite this the Central Bureau of Statistics is optimistic
On Wednesday, the Central Bureau of Statistics published encouraging data about Israel’s tech industry. Despite the war, exports of services only fell 3.1% in November while exports of services in the tech sector was the only industry where exports of services rose – by 1.6% to $4.6 billion.
However, Biran has reservations about the findings. “The Bureau’s definition of high-tech is very broad but does not include companies that inevitably affect the way the data is seen, such as the startup companies.”
Published by Globes, Israel business news – en.globes.co.il – on January 25, 2024.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.