The Israel Innovation Authority on Monday released its 2017 annual report, in which it explores the trends and aspects of the Israeli hi-tech industry.
Israel enjoys achievements on a global scale, the report says. For example, Israel is first in the world in R&D and in venture capital (VC) investments as a percentage of GDP. 600 new startups establish every year, more than 300 multinational R&D centers active in Israel, among them Intel, Google, IBM and Apple.
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“Israeli hi-tech is an unheard of success story enjoying a period of steady growth,” the report says. “However, Israel’s flourishing hi-tech success does not spill over into other areas of the country’s economy, and most do not enjoy its fruits.
According to the report, only 8.3% of salaried employees are in the hi-tech sector. Their salary is more than double the national average. Therefore the goal is to bring in “half-a-million people employed within a decade. doubling the current number which is approx. 270,000 in the innovation industry.”
How would it be achieved?
Expanding the circles of influence of multinational companies in terms of employment opportunities and the range of technological fields.
Encouraging the growth of Israeli companies – from being startups at the early stages of developing technology to grow in Israel as “mature companies” with a complete value chain including manufacturing, marketing, global operations, accounting, budgeting, logistics and more.
Expanding spheres of employment in hi-tech, including integration of women, Arab and Ultra-orthodox Jews in the workforce, along with veteran engineers age 45 plus.
In addition, by diversifying the entry points to hi-tech employment by promoting initiatives such as coding boot-camps and others.
Developing other innovative sectors with an emphasis on the life sciences.
Promoting innovation and in a wide range of industries, especially leveraging global trends in Industry 4.0.
Israeli Minister of Economy and Industry, Eli Cohen said “In a global economy characterized by technological innovation, Israel is a key player. This can be seen in the number of startups in Israel, and the number of leading international companies active in Israel.”
The 2017 Innovation Report presents a roadmap for future development. One is by providing incentives for multinational companies to add manufacturing and export activity to their R&D in Israel. “This will increase the number of people employed in technological branches in general, particularly in the periphery,” Cohen said.
Aharon Aharon, Director of the Israel Innovation Authority said: “Israel is second in the world in the Global Economic Forum’s Innovation Index. However, these achievements do not carry over to other branches of the economy. The percentage of employees in hi-tech lies at only 8% for over a decade now.
Aharon added that manufacturing industries in Israel are not innovative enough and have trouble competing with the low costs in the East and the high production standards and innovation level of the West.
“If we do not act to leapfrog these industries forward – the gap between the hi-tech industry and traditional economy will only increase,” he said.
In addition, according to Aharon, “the hi-tech industry itself is facing significant challenges such as a lack of engineers and programmers, and shortage of highly trained employees is partly the reason for the high salaries in this sector.”
Between 2005 and 2015, the average salary in the hi-tech sector is NIS 21,000, more than double the average national salary (NIS 9,800). It increased by 38%, particularly significant given the shekel’s 13% hike in value against the U.S. Dollar over the past years.
moreover, the Israeli model of innovation is largely based on creating technological added value, mainly in startup companies and multinational R&D centers.
“The Israeli innovation ecosystem, however, is still in the first stages of developing effective mechanisms for seizing the economic value emanating from the technological value created here,” Aharon said. “The result is that today is a basis for creating technological value in Israel, but the economic value is enjoyed outside Israel’s borders.”
Aharon Aharon, “The Israel Innovation Authority has taken on an ambitious and challenging mission: taking the Israeli innovation system to the next level. We are acting to strengthen Israel’s position as a global hub of innovation; to ensure that our hi-tech growth engine – including technological innovation and entrepreneurship – reaches additional sectors and branches of the economy, and to increase the economic value that technological activity in ICT brings. The Authority’s strategy is based on three tiers – developing infrastructure for innovation, strengthening technological value and harnessing economic value – while distinguishing between innovation ecosystems (ICT, manufacturing, life sciences and so on). It should be noted that this strategy constitutes a change in Israel’s innovation policy, which until today focused mainly on the second tier, i.e. encouraging R&D processes and creating technological value.”
