AnalysisTech employment rate plummeted last year, and is getting worse in 2024
Analysis
Tech employment rate plummeted last year, and is getting worse in 2024
2023 was a year of extreme ups and downs in employment that ended with the number of high-tech employees close to the average of 2022. Between October and December the number of employees in the industry decreased by 15,000, due to the decrease in investments and the war
The Central Bureau of Statistics' summary of the year in employment brought very unencouraging news. If in October it seemed that high-tech was not affected by the war, since then the number of people employed in the sector has been shrinking. The number of employees in the high-tech industry has decreased since April 2023 by 10% from 474,000 to 427,000 in December. In doing so, it returned to the average level of 2022. These are December figures, which do not include the wave of layoffs of the high-tech giants in January. That is, it is quite possible that in January we will see another contraction.
In the last month there was a slight decrease from 429,000 in November to 427,000 in December. In an annual calculation, the average number of employees in the high-tech industry actually increased by 3.2% from 427,000 in 2022 to 441,000 in 2023. But annual calculations are good for history books. In the near term, they somewhat resemble the person who drowned in a pool whose average depth is 20 cm.
In 2023, which became a roller coaster year, the number of employees climbed at the beginning of the year and reached all-time highs in March and April. Then there was a decrease due to the judicial reform and the global recession with a low of 411,000 in August, a partial recovery to 442,000 in October and then a renewed decrease due to the war.
In 2023, tech companies raised $9.9 billion, the lowest figure since 2019. True, all over the world there was a significant decrease in capital raising compared to 2022, but in Israel there was a decrease of 50% compared to 30% in the United States and 44% in Europe. Also, the fact that since the summer there had been an increase in personnel recruitment obviously facilitates reductions in the war. The big question that does not have an answer in the data is which personnel are leaving.
The founder of the human resources consulting company AKT, Dror Gurevich, sees things completely differently and attributes most of the impact to internal processes in the high-tech world. "In past years there was mismanagement. The high-tech companies, fueled by cheap money, over-expanded. The markets are not reacting as they expected." In his opinion, this is the main reason for the reductions, along with the decrease in investments and the reluctance to raise more funds at low market values. "I see no connection to the drama that happened in Israel."
An interesting fact is that fluctuations in the number of high-tech workers affect the employment of men much more than women, so while the number of male workers in high-tech reached a peak of 325,000 in April and decreased since then (until November) by 20% to 270,000 in December, the number of employed women in December stood at 157,000, a record figure, as in June. This seems to mean that when the number of employees in high-tech increases, mainly men are recruited. When there are cuts, the number of women increases without necessarily increasing their number, and thus it reached 37% in December.
The unemployment rate in the classic sense (unemployed people looking for work) dropped from 3.8% in 2022 to 3.4% in 2023, a very low rate. But these are data that are annual averages, so their relevance in a year with unusual events is also limited. Unemployment in the classical sense had very little importance at the end of the year, when the wave of unemployment began. In December, the unemployment rate stood at 3.1%. The Treasury believes that this is nevertheless a positive figure because it indicates that the majority of employers did not fire their workers, but were content to put them on unpaid leave.
The most extended unemployment rate, which also includes the unemployed and those who despair of looking for work, rose from 5.3% in 2022 to 5.7% in 2023. But this figure is problematic because it is an average that includes most of the year when unemployment was very low and the war period in which expanded unemployment exceeded 10%. The expanded unemployment rate dropped from 10%, which is 448,000 people in November, to 7.5%, which is 341,000 in December. It is expected to further decrease in January following the end of the unpaid leave benefits.
