Hebrew Report: For the First Time.. A Decrease in Development Jobs in Israel's Advanced Technology Sector

SadaNews Economy Translation - An economic report published by the Hebrew newspaper Calcalist showed a decrease of 1.1% in the number of employees in research and development jobs within the advanced technology sector in Israel, marking the first decline of its kind in this field.

According to the report, this slight decrease comes despite the strong performance the sector continues to achieve during the years of war, raising questions about the trends in the tech job market in Israel and the possibility of this decline evolving into a broader phenomenon that includes a brain drain. However, researchers emphasize that it is still early to make judgments on this matter, according to SadaNews Economy Translation.

The report's author, Dr. Sergey Sumpkin, notes that the reasons for this decline may be attributed to several intertwined factors, including what he describes as the "maturation of some advanced technology companies," where the number of development jobs decreased slightly, against a background of a 10% increase in production jobs within the sector, as SadaNews Economy translated.

The report indicates that research and development jobs still represent about 50% of the total jobs in Israel's advanced technology sector, compared to 44% in 2017 and 37% in 2012, reflecting the continued weight of this field in the Israeli tech economy, despite recent changes.

According to the report, the ongoing war for more than two years has created challenges for the technology sector, including delays in development processes due to the reserve service of many workers, difficulties in traveling and communicating with clients, in addition to periods of escalation that impacted work pace.

The report also pointed to a growing trend among some startups to hire developers outside of Israel or to rely on Israeli personnel residing abroad, particularly in countries like the United States and Portugal, leading in some cases to the establishment of Israeli-identify companies operating from outside the country.

An example mentioned in the report is the cybersecurity company "Artemis," which raised $70 million in funding and is based in the United States, although its founders are Israelis and it employs several Israeli workers abroad without a development center within Israel, according to SadaNews Economy Translation.

On the other hand, the report presents an overall positive image of the advanced technology sector, which continued to grow during 2025, recording historic levels in exit operations and capital raising, alongside a 4.7% increase in labor productivity, which the report attributes to the expansion of artificial intelligence technologies usage.

According to the data, the number of workers in the advanced technology sector reached about 570,000 jobs, representing 16.3% of the total workforce in Israel, marking a return to growth after a period of stagnation that lasted since October 2023.

The report also indicates that the sector contributed about a fifth of the GDP, a quarter of direct tax revenues, and 45% of economic growth, in addition to achieving record levels of advanced technology exports and a significant increase in defense industry exports over the past five years.
Despite the challenges, the report believes that the government goal of raising the percentage of workers in the technology sector to 20% by 2035 remains achievable, but it requires growth rates higher than those currently recorded.

The report concludes that the spread of artificial intelligence tools in companies has directly contributed to improving productivity, with expectations that its impact on the labor market in the technology sector will continue, without necessarily leading to a significant reduction in jobs in the near future.