{"id":4043,"date":"2023-03-03T09:59:00","date_gmt":"2023-03-03T09:59:00","guid":{"rendered":"https:\/\/innovationisrael.org.il\/en\/?post_type=report&p=4043"},"modified":"2023-08-15T14:50:33","modified_gmt":"2023-08-15T14:50:33","slug":"how-can-israeli-high-tech-help-rehabilitate-the-economy","status":"publish","type":"report","link":"https:\/\/innovationisrael.org.il\/en\/report\/how-can-israeli-high-tech-help-rehabilitate-the-economy\/","title":{"rendered":"How can Israeli High- Tech Help Rehabilitate the Economy?"},"content":{"rendered":"\n
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Like most countries, Israel\u2019s economy has been dramatically impacted by the Covid crisis and its ramifications. However, when closely examining Covid\u2019s influence on the different sectors of the local economy, it is clear that the crisis has only emphasized existing gaps between high-tech and the economy in general. This polarity is reflected in the way in which the high-tech sector was affected by and contended with the crisis compared to the other hard-hit sectors which suffered from reduced demand and continued to suffer from high levels of unemployment relative to the pre-Covid period.<\/p>\n\n\n\n
As we have shown, high-tech was adversely affected by the crisis and high-tech employees, primarily those earning less than NIS 15,000, did lose their jobs or were sent on unpaid leave during the first lockdown period, however the reaction was swift. The flexibility that characterizes the high-tech sector was reflected in the quick drop in salaries and almost no use was made of the option to send employees on unpaid leave. CBS surveys conducted in May-June 2020 reveal that on average, 22% of high-tech employers instituted salary cuts while in the other sectors of the economy, only 10% of employers on average adopted this measure.Results of the “State of Businesses during the Covid Virus Outbreak\u201d survey, waves 4, 5, 6. Furthermore, CBS surveys conducted at the beginning of the Covid crisis in March-April 2020 reveal that only 2.6% of high-tech employers sent their employees on unpaid leave compared to 11% of employers in the economy as a whole.Results of the “State of Businesses during the Covid Virus Outbreak\u201d survey, waves 2 and 3. Evidence of this can be seen in the fact that at the height of the first lockdown period, the overall ratio of unemployment benefits\u2019 recipients was double that of the high-tech sector, 28% compared to only 14% in high-tech.Innovation Authority adaptation of NII data. The Covid crisis continued to impact the other different sectors of the economy during subsequent lockdown periods more than the high-tech sector although the disparities in these impacts gradually declined.<\/p>\n\n\n\n
In summary, Covid caused a rise in the level of inequality in Israel. The adverse impact of Covid was concentrated in those sectors of the economy typified by low productivity, with the younger and less-qualified employees generally being the most affected in each sector.See for example, Chapter 1 of the Bank of Israel Report, 2020. Another prominent difference between high-tech and the other sectors relates to the move to working from home. High-tech succeeded in making the transition from work at the office to working at home smoothly and relatively quickly. In organizations in which numerous teams of employees are scattered throughout the world and most of the work is performed via computer, the ongoing disruption to work was relatively small. In contrast, in other sectors in both the public and private sectors, organizations encountered greater difficulty in making the transition from office to home.<\/p>\n\n\n\n
There are various reasons for these difficulties: first, there are some sectors of the economy in which the workplace itself is the focus of work, therefore precluding a move to the home. A CBS survey conducted in January 2021 revealed that most employees who lacked the option of working from home worked in construction and retail sectors \u2013 work that is based at a specific physical location.Results of the “State of Businesses during the Covid Virus Outbreak\u201d survey, wave 10. Second, it seems that, apart from high-tech, few of the other sectors which had the option to adopt digital services and make the move to working from home, such as building an online store, indeed took this step. Non-high-tech sectors were thus quick to return to working in the office between lockdowns. A CBS survey conducted in June 2020, immediately after the first lockdown, revealed that the ratio of high-tech employees working from home remained high at 37%, while this figure dropped to just 3% in the other sectors of the economy.Results of the “State of Businesses during the Covid Virus Outbreak\u201d survey, wave 6. A more detailed discussion of the transition to a hybrid work model that combines work from the office and home following Covid is presented below.<\/p>\n\n\n\n
As the economy gradually reopens and begins its revival, the question arises as to how the hightech sector and the introduction of innovative solutions can help economic recovery and what the other sectors of the economy can learn about how to contend with global economic crises. Furthermore, in this chapter we will examine how the implementation of Israeli technological solutions can be utilized to improve services provided to the citizens and to streamline the Israeli public sector.<\/p>\n\n\n\n
Public expenditure in Israel increased significantly during the Covid crisis as the result of the support provided to affected sectors of the population, aid given to ensure continued business activity in an economy that was partially closed, and the support provided to the health system and to the formation of the mechanism required to deliver the vaccine. Now, with the beginnings of economic recovery and return to routine, the need to reexamine public spending has become more acute, especially in light of a sharp increase in the Debt-GDP Ratio and in the development of broad growth engines that will enable its rehabilitation. This need emphasizes high-tech\u2019s importance to Israeli economic growth and the central role it will play in its recovery following the Covid crisis. It is important therefore to ensure the preservation of Israeli high-tech resilience and its global competitiveness.<\/p>\n\n\n\n
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