Head of employment service: AI bringing increased unemployment in hi-tech sector

Unemployment in Israel's hi-tech sector has reached record levels, with over 16,000 workers currently registered as job seekers. Inbal Mashash, director general of the Israel Employment Service, attributes this trend to the rapid expansion and integration of artificial intelligence, which is particularly impacting experienced software developers. This shift highlights a growing need for industry-wide upskilling as AI reshapes the core labor market for technology professionals.

Inbal Mashash, director general of the Israel Employment Service, reported that unemployment in the hi-tech sector has hit a record high for non-emergency periods, with more than 16,000 workers currently seeking employment. This figure represents a threefold increase compared to 2022 data, signaling a significant shift in the labor market. Mashash noted that the impact is most pronounced among software developers, who make up half of the job seekers and are frequently displaced due to their high exposure to artificial intelligence automation.

The profile of those affected includes seasoned professionals from the industry's core, many of whom possess more than eight years of seniority and experience. Despite the rise in unemployment, there remain approximately 14,000 open positions within the hi-tech sector and another 4,000 technology-related roles in other industries. Mashash emphasized that the rapid pace of AI advancement necessitates comprehensive upskilling across all sectors, as the traditional roles of experienced developers are being fundamentally altered by new technologies.

To address these challenges, the Israel Employment Service is collaborating with the Innovation Authority, the AI headquarters, and the Manufacturers Association to facilitate the transition of tech workers into non-technological sectors, such as traditional industries. This strategy aims to provide a double benefit by modernizing traditional businesses while re-employing skilled tech talent. Mashash warned that the negative employment trend is expected to continue rising in the coming months before eventually moderating as the market adjusts to the AI-driven landscape.