Israel: Prime Minister Backs Plan to Import Skilled Workers for High-Tech Labor Shortage

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By Jenny David

March 21—Prime Minister Benjamin Netanyahu is determined to implement a plan to attract foreign high-tech “elites” to work in Israel, Eli Groner, director-general of the Prime Minister's Office, told Bloomberg BNA in an exclusive interview March 20.

The initiative is aimed at alleviating a shortage of engineers and other skilled workers in Israel's high-tech sector for the “one or two years” it will take to “expand the funnel” of the domestic labor supply through educational programs, subsidies and an increase in cyber-related army positions, Groner said.

Labor Shortage Causing High-Tech Slowdown

In the first phase, the Economy Ministry will issue several hundred work visas to Israeli start-ups and R&D subsidiaries of multinational companies to bring in foreign workers with the skills the companies require.

“Historically, there has been a surplus of high-tech workers in Israel,” Groner said. “But with all the multinational companies now in Israel snapping up engineers left and right, we need to supplement the workforce.”

Groner predicted that many of the workers will come from India, Cyprus and Ukraine.

“Many skilled foreign workers gravitate to Silicon Valley from other places. That's the model we want to replicate,” Groner said, noting that the bureaucratic process of issuing visas “will be made much easier for companies that identify and want to bring in workers.”

According to a recent Foreign Ministry report, the shortage of skilled high-tech workers is key to a slowdown of Israel's high-tech sector, as a result of which high-tech is no longer the country's main economic growth engine.

The labor shortage is pushing up salaries and eroding Israel's competitive edge, and the sector's share of all Israeli exports, which grew from 15 percent in 2001 to more than 35 percent last year, has leveled off, according to the report.

Business Leaders Urge Local Solutions

While agreeing there are not enough trained high-tech personnel in Israel, business leaders said the labor shortage could be solved by domestic policy changes, and labor representatives are concerned the program could be expanded to include thousands of visas for software engineers and other high-tech workers.

While stressing that “entrepreneurship and innovation are flourishing in Israel” with “an unprecedented number of startups, together with large multinational firms,” Israel Advanced Technology Industries Co-chairmen Erez Tsur and Yaky Yanay said a long-term policy is needed to address the sector's “core problems, including encouragement of technological education, attracting multinational companies, encouraging investments by institutions [and] an attractive taxation policy.”

“The startup nation is plowing ahead, but the state support system is not keeping pace,” said Erez Shachar, a managing partner in Qumra Capital growth fund. Noting that “the technology sector has used up the trained personnel that came to Israel from Russia in the 1980s and 1990s,” Shachar said that “the state must devise an immediate emergency program for accelerated training in technological subjects for ultra-Orthodox Jews and Arabs,” which should include scholarships, an accelerated training program, informational campaigns and technological education programs in elementary schools.

Foreign Workers Could Harm Local Sector

Nir Yanushevsky, vice president of Yanushevsky Engineering and Construction, said the import of foreign workers could send high-tech down the same “slippery slope” traveled by the construction industry under a similar plan.

“The high-tech industry would do well to learn from the failures of the construction industry,” Yanushevsky said. “It should simply not agree to import foreign workers, who will initially push local workers out of the industry.”

Next, “the government will propose bringing foreign high-tech companies into Israel, subject to economic incentives, so that competition in the industry will become unfair and unequal,” Yanushevsky added, urging the government to “not make do with the instant solution that holds negative consequences for the economy.”

To contact the reporter on this story: Jenny David in Jerusalem at correspodents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

The prime minister's initial announcement is available in Hebrew here.

For more information on Israeli HR law and regulation, see the Israel primer.