Despite the AI boom, tech layoffs aren’t about automation
New survey shows AI plays only a marginal role in workforce reductions.
Despite the growing penetration of AI tools across Israel’s high-tech sector, artificial intelligence is not currently a major driver of layoffs or employment reductions in the industry. That is the conclusion of a new employer survey by the Israel Innovation Authority, conducted in December 2025 in collaboration with Zviran.
The survey, which included 263 companies, 192 of them high-tech firms, represents employers accounting for roughly 80% of the industry’s workforce and includes multinational companies operating in Israel. Its goal was to assess whether the adoption of AI tools is contributing to the stagnation seen in recent years in high-tech employment.
The findings show that 35% of high-tech companies laid off employees in the past six months, mainly due to downsizing or the closure of teams and departments, a higher rate than in the rest of the economy. However, only 5% of companies cited AI implementation as a significant factor behind the layoffs. In most cases, layoffs were attributed to efficiency measures or the company’s business situation. Just two companies in the sample reported AI as the sole reason for downsizing or closing departments.
According to Innovation Authority CEO Dror Bin, the data highlights a gap between public discourse around AI and the reality on the ground. “AI is already embedded in the core activities of high-tech companies in Israel and is transforming them, but so far it is not replacing workers to any meaningful extent,” Bin said. “At this stage, the labor market appears to be undergoing a gradual adjustment rather than a shock. The main challenge is not job losses, but skills matching, employee training, and the correct integration of new technologies.”
Looking ahead, the survey also finds no indication that AI will accelerate layoffs. About 15% of high-tech companies plan to lay off employees in the next six months. Among them, 71% said the implementation of AI had no impact on the decision, while 29% reported only a minor impact. No company indicated that AI was a significant factor in planned layoffs.
At the same time, hiring showed signs of moderate recovery in 2025. Ninety-four percent of high-tech companies recruited employees over the past six months, though the share of new hires relative to the workforce stood at 7.9%, slightly lower than in the rest of the economy. Only 3% of companies said they reduced hiring as a result of AI integration. However, 23% of high-tech firms expect hiring levels in 2026 to be lower than in 2025. Here too, efficiency considerations and business conditions were cited as the primary reasons, while AI implementation was mentioned by about 5.7% of companies, mostly as a secondary factor.
Alongside its limited impact on employment, AI is already deeply embedded in work processes. Fifty-two percent of high-tech companies reported significant implementation of AI in systems and products, compared with 18% in other industries. In addition, 43% reported substantial use of AI tools in non-technological roles.
