The mounting direct costs of the ongoing war—reflected in an expanding budget deficit, rising debt-to-GDP ratio and the risk of a credit rating downgrade (which wouldn't be unprecedented)—are creating serious doubts about Israel’s ability or willingness to address the critical need to expand its high-tech workforce.
This stark warning comes from the Inter-Ministerial Committee for Expanding Human Capital in High-Tech, chaired by David Perlmutter, in a follow-up report published on Monday. According to the committee, the war has created significant growth potential for Israel’s defense-tech industries, making it more urgent than ever for the government to solve the ongoing shortage of skilled workers in the high-tech sector.
“The 2025 budget must prioritize these initiatives as a national mission,” emphasizes Perlmutter, the committee’s chair. “Without urgent action, Israel risks losing its technological edge and the economic and security benefits it brings. The high-tech sector is essential to our economy, and the technologists of tomorrow are the ones who will develop Israel’s future security solutions. This war has proven beyond a doubt that technological education is our Iron Dome.”
The committee, which submitted its final recommendations in November 2022, points out that while these recommendations were adopted by the government, their implementation has been slow. The committee is now issuing a “red flag” regarding the urgent need to accelerate these efforts, especially in light of growing national, economic and technological uncertainties, as well as the rapid pace of global technological advancements.
The follow-up report paints a worrying picture of stagnation, with a troubling trend toward decline. At the end of 2023, 508,780 workers were employed in high-tech jobs, accounting for 14.9% of Israel’s workforce. By mid-2024, that number had dropped to 507,701, representing 14.7% of the workforce. The decline is particularly noticeable in growth-oriented professions. To meet its 2028 target of 736,000 high-tech workers, the committee says an annual growth rate of 3.5% is required.
To meet the needs of Israel’s high-tech industry and economy, the number of high school graduates eligible for "tech matriculation" (the basic qualifications required for high-tech jobs) must grow from 13,850 in 2023 to 23,600 by 2028. Similarly, the number of university graduates with technology-related degrees must rise from 7,500 in 2023 to 9,000 by 2028. Without these significant increases, the committee warns, “we will fail to meet the needs of the economy in the coming years.”
The Perlmutter Committee, established by a government decision in 2021, is an inter-ministerial body tasked with expanding human capital in high-tech. Led by the Ministry of Innovation, Science and Technology, the committee includes representatives from the government, business sector and nonprofit organizations.
David PerlmutterPhoto: Pini HamoThe report also notes that between 2014 and 2021, the percentage of high school students eligible for "tech matriculation" rose from 6.4% to 11%. However, in the absence of active policies, this upward trend has stalled. The committee’s target—to reach 17% by 2028—has now become much harder to achieve. Similarly, the number of students enrolling in technology-related academic degrees has plateaued after years of steady growth.
New recommendations for focused efforts
In light of the dramatic changes in Israel and the world since its last report, the committee has outlined new recommendations to modify existing plans and focus on additional areas. These include:
- Deepening collaboration between schools in neighboring municipalities.
- Expanding physics centers and establishing computer engineering centers.
- Increasing informal educational programs to encourage girls to pursue "tech matriculation."
- Rethinking recent changes to the structure of the mathematics matriculation exam.
- Integrating AI education into the curriculum from an early age.
- Institutionalizing a national technological-civil service program for populations that do not enlist in the military.
- Incentivizing academic institutions to increase the number of students pursuing double-major degrees that include technology.
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“The data is a clear warning sign for the economic resilience of the country and the future of the high-tech industry,” said Gila Gamliel, the Minister of Innovation, Science and Technology. “This situation demands a shift in mindset and new national priorities in the Ministry of Finance and the allocation of national budgets toward formal and informal education in tech-related fields. Without these changes, we risk losing our superiority in intelligence, security, space and energy to nations that have already made these necessary adjustments.”