The Edge of Tech
Israeli tech's undercurrents: A special report on the employment crisis
New data shows layoffs doubling in five years, hitting veteran talent hardest while companies chase productivity over people.
A special report on the employment crisis
(CTech-Caledo studio)
Welcome to a special edition of The Edge of Tech, where CTech and Calcalist reporters take a closer look at the latest employment figures in Israel’s high-tech sector - revealing a profound and troubling shift.
The special report begins with presenting stark numbers, revealing a severe employment crisis unfolding beneath the surface. The number of high-tech job seekers in Israel has more than doubled, increasing by 112%, from approximately 7,000 in January 2019 to nearly 15,000 in April 2025. This surge is specific to the tech sector, contrasting sharply with a 4% decrease in non-high-tech job seekers over the same period. The actual situation may be even worse, as many younger tech employees do not register for unemployment benefits, either due to insufficient work time or short benefit periods.
Crucially, this crisis has reached veteran and experienced workers, individuals companies are usually highly reluctant to let go. The most significant rise in job seekers was observed among 36-45 year-olds, challenging the notion that the increase is primarily among junior employees. Core tech professions are heavily impacted:
- Job seekers in database and network sectors increased by over 223% since January 2019.
- Software developers and application analysts seeking work rose by about 147%. These two groups alone accounted for about half of all unemployed high-tech workers in April 2025. A particularly worrying trend is the soaring share of high-salary earners (25,600-43,800 shekels per month) among high-tech job seekers, jumping from 15% in August 2022 to 40% in April 2025. This demonstrates the crisis has deeply affected the "relatively strong middle class" of skilled, experienced tech workers.
Further evidence points to a "genuine crisis" driven by layoffs, not resignations. The number of laid-off high-tech job seekers increased 2.5 times between Q1 2022 and Q1 2025. Consequently, the market has shifted dramatically from favoring workers to favoring employers. In January 2019, there were 1.6 open positions for every unemployed high-tech person; by April 2024/2025, this dropped to 0.9, meaning there are more job seekers than open roles. Despite a 22.5% increase in total high-tech employment from 2019 to 2025, the number of job seekers has more than doubled in the same period, highlighting a significant disconnect.
Record Capital, Fewer Jobs
The data presents a significant paradox: record capital raised in the first half of 2025 seems to contradict the declining employment figures. This divergence reveals critical shifts under the hood of Israel's high-tech scene. One key factor is sharply increasing worker productivity driven by AI adoption. Three years ago, growth was signaled by hiring more; today, the new benchmark for success is having fewer employees, signaling a company's AI edge. Giants like Microsoft have cut thousands of jobs as AI takes over roles, and the dream of a typical startup founder is now a "one-person unicorn". This profound shift also threatens junior positions and fresh graduates, who are supposed to be the industry's next wave.
Other contributing factors include multiple rounds of global layoffs by international companies with R&D centers in Israel, as well as local unicorns that over-hired during boom years. When interest rates rose and easy money dried up, these companies had to cut back. Additionally, extended reserve duty for approximately 20% of high-tech workers has affected workforce participation, with social media filled with stories of layoffs and early retirements due to burnout.
A current buffer for the crisis is the defense industry boom, which is absorbing many laid-off tech employees. In the past, defense companies struggled to compete with startups, but now they are becoming increasingly attractive, especially to highly skilled workers laid off from companies like Intel or Microsoft. However, this could trigger a "next crisis" if global demand for defense products declines and these industries begin layoffs. The paradox of growing GDP (11.8% in Q1 2025 compared to 2024) with falling employment means high-tech is turning into an even more elite, exclusive club, widening social and economic gaps.
Top Talent and Hiring Hurdles
Adding to the complexity of this crisis, some companies are alienating top talent with excessive take-home assignments in their hiring processes. Candidates for senior positions, often considered "talent" that companies would be keen to recruit, frequently drop out at this stage. Shmuel Navon, CEO of Wolt Market Israel, noted that 25% of candidates for management and junior positions drop out during the assignment stage.
For many senior candidates, who are often working full-time and under confidentiality restrictions, these extensive tasks are viewed as an unreasonable time investment or "unpaid labor". They may not feel the commitment is justified so early in the process. For those with "years of proven experience," such requests can be seen as "disrespectful" or even "insulting". Experts warn that poorly designed assignments risk alienating strong candidates and damaging a company's employer brand. Even in an employer-driven market where competition is fierce, a positive candidate experience is crucial for an organization's reputation.
The future of high-tech employment remains uncertain amid geopolitical instability, internal crises, and the transformative impact of AI. Attorney Inbal Meshesh, Director General of the Employment Service, emphasized that these "professional and experienced workers" from the core of the industry are a "national asset that must be nurtured and reintegrated into employment". The challenge for Israel's high-tech sector is not just navigating economic shifts, but also ensuring its talent pool remains engaged and valued.
The Edge of Tech is an innovative news experience, powered by AI, where CTech's journalists are generated with AI, straight from our AI-native newsroom, in collaboration with Caledo news. All news, opinions and analysis are based on the professional work of CTech and Calcalist content. The AI transforms the articles into dialogs between the avatars, and creates riveting studio shows.
