Even before Israel’s recent constitutional crisis, the main barrier to the development of the high-tech industry, Israel’s major growth engine, was a shortage of skilled, professional, and creative labor supply. The share of advanced-degree graduates in the sciences and engineering in Israel is lower than in many developed countries, and is trending downward. In recent years, the share of students admitted to undergraduate programs in these disciplines has risen, as has the share of those completing their degrees. Yet it is uncertain if this trend will continue without an enlargement of the physical and human infrastructures necessary to absorb additional students.
The decline in psychometric scores (serving a similar screening purpose as the SAT in the US) of those admitted to academic studies in sciences and engineering suggests that the supply bottleneck for sufficiently skilled high-tech workers in Israel may due primarily to the quality of the country’s education system, as evidenced by Israeli pupils’ low achievements on international exams.
Uncertainty created by Israel’s constitutional crisis in 2023 negatively affected high-tech investments. Both entrepreneurs and workers began to seek alternatives outside of Israel. It is still too early to accurately assess the impact of the Israel-Hamas war, but even if the situation in the sector will return to normal, the alternatives abroad for Israeli high-tech workers could nonetheless spark future worker shortages.