Israeli high-tech salaries under pressure

Economic uncertainty and a falling exchange rate have hurt high-tech's ability to compete.

The Israeli high-tech industry, which has enjoyed sustained expansion since 2003 and has been one of the main engines driving economic growth, is now at a crossroads. The uncertainty surrounding the global economy and falling shekel-dollar exchange rate have severely harmed its ability to compete in global markets and ensure the sector's companies maintain reasonable profit margins. The high-tech industry's principal resource is its human capital - the highly-skilled labor force which constitutes an important and critical factor in the technology industry's costs. But with the industry's labor force earning its income in shekels and the revenue on technology sales in dollars, the industry is increasingly finding itself facing an uphill battle.

"The expected slowdown in the Israeli high-tech industry and the substantial fall in the shekel-dollar rate have not yet been felt in full in salary levels, but they are beginning to have an effect on salaries in the high-tech sector," says Prof. Moshe Zviran associate professor at the Leon Recanati Graduate School of Business Administration, Tel Aviv University, and CEO of Zviran Consulting and Surveys Ltd. Zviran has for some years conducted a salary survey, which represents a source of information on the Israeli high-tech industry. According to his latest bi-annual survey, salaries continued to rise in the first half of 2008, albeit at a slower rate than forecast at the end of last year.

Despite the crisis, Israel's high-tech industry is still unique thanks to its highly dynamic workforce. According to data published by Zviran, 7,400 people were hired in the first half of 2008, 3,000 were fired, and a further 5,200 left of their own volition. 20% of companies reported an employee intake, which reflects a net increase in workforces in the companies in question, but an analysis of the overall trend points to a slight contraction in the size of the industry's labor force. A breakdown of hiring by key sectors in the first six months of 2008 shows that the two professions most in demand were in R&D and software; specifically, Real Time, algorithms, applications, testing, and quality assurance.

Other professions that saw strong demand were verification and mechanical engineers, physicists, and sales and marketing personnel. Zviran notes that because demand has exceeded supply in these professions, "salaries for newly hired employees in professions for which there is a demand, are still 5-8% higher than those of people already holding such a position."

Published by Globes [online], Israel business news - www.globes-online.com - on July 14, 2008

© Copyright of Globes Publisher Itonut (1983) Ltd. 2008

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