"Israel is failing to integrate ultra-Orthodox and Arabs into the high-tech industry"

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by Ifi Reporter Category:Hitech May 11, 2022

The Innovation Authority today released its comprehensive report for 2022, which raises a number of issues that are of great concern to the local high-tech industry. The State of Israel is failing to integrate ultra-Orthodox and Arabs into the high-tech industry in significant numbers, despite investing tens of millions of shekels in efforts to integrate them into high-tech.
According to the report, Israel ranks first in OECD countries in terms of R&D expenditure relative to GDP. In 2019, Israel first crossed the 5% threshold in this index, and in 2020 the figure was already 5.44%. On the other hand, Israel is ranked last among OECD countries in the rate of government investment in R&D out of all expenditure in the field. In 2019, less than 10% of total R&D expenditure, equivalent to about 0.5% of GDP, was funded by the government.
Dror Ben, CEO of the Innovation Authority, says: "We have a very unique profile with the highest investment in R&D, but the government invests very little. We all agree that the situation is good, but never resilience. Other countries invest a lot of money in innovation. The private market may "I make up for it, but I do not want to find out how many more years we will be behind. High-tech is still the locomotive of the economy and it would be a disaster without the high-tech industry."
Another difficult problem is the inability to integrate ultra-Orthodox and Arabs into the high-tech industry in significant numbers. Despite investments of hundreds of millions of shekels over the years in both sectors, Israeli high-tech has not yet recruited representatives from all sectors of the population and changes in the diversity of human capital in high-tech have eroded. A 6% decrease in the number of ultra-Orthodox workers in high-tech was observed - a decrease of 700 employed due to the departure of 1,200 ultra-Orthodox women from the field - and a modest increase of only about 200 workers in the number of Arabs employed in high-tech.
In fact, high-tech maintains its status as an industry whose growth is mainly of men belonging to the Jewish (non-Haredi) population and in the center of the country. In general, high-tech maintains its homogeneity as a Jewish industry: less than 2% of its employees are Arabs. It employs mainly men who are not ultra-Orthodox, women make up less than a third of the employees in the industry, and ultra-Orthodox men and women occupy only 3% of it. According to the report, Israeli high-tech currently employs about 360,000 workers, of whom about 240,000 are Jewish men. "Despite investments by the government and the PA in recent years, they do not see a demographic breakthrough," says Bean. "We want all citizens of the country to enjoy the high-tech boom, but must act. The Innovation Authority is at the end of the chain. The state must take care of a good education and more math and English."
In addition, most Israeli innovation does not reach the State of Israel. High-tech companies are in no hurry to export their technology but many bureaucratic difficulties prevent them from operating here. Even in academia, most of the work is with foreign bodies. According to the report, "Israel ranks first in the world in the field of collaborations between academia and industry according to the Global Innovation Index (GII), but only 15% of the academy's collaborations with industry are with Israeli companies. Nearly half of the collaborations are with Microsoft Deepening the collaboration between the growing Israeli technology companies and academia will expose the companies to both a source of quality manpower and advanced knowledge and will allow them to deepen their ability to continue to be innovative and competitive in the global market.
Another major problem is the centralization of Israeli high-tech. According to the report, 56% of high-tech investments in the past year have been directed to one of three areas: enterprise software, fintech and cyber (25%, 17% and 14%, respectively). In addition, according to CrunchBase data, Israel garnered 21.7% of its global cyber investments. "The State of Israel is very focused on enterprise software and cyber, and if there are no investments in other areas it may get into trouble. Israel deteriorates in many innovation indices and innovation does not enter the country. The laboratory that invents innovation for the world does not use them. "Health and food," says Dror Bean.
The report shows that 2021 was a revolution in the local high-tech market. One of the signs of recovery for the high-tech industry in 2021 is the increase in the number of new entrants: if in 2020 the number of workers in the high-tech industry increased by only 14,000 people, then in 2021 the increase was double and stood at about 27,000 workers. When examining the distribution of high-tech workers among the various types of companies in which they are employed, it can be seen that despite Israel's image as a "start-up nation", only about 8 percent of the workers in the industry are employed in companies defined as start-ups. In fact, most workers are employed in the defense industries, which are the largest employer in the industry. They are followed by the growth companies 21 percent of the IT companies with about 20 percent of the employees and the multinational companies 18 percent.

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