How much is the high-tech industry worth to the Israeli economy? You won't believe it - voila! Of money

The high-tech industry is leading the protest against the legal revolution, but is it really the anchor of the Israeli economy? (Photo: Yanon Shalom Yathach)

The high-tech industry has positioned itself at the head of the camp opposed to the legal revolution initiated by the Israeli government.

A large part of the entrepreneurs and senior managers in the industry threatened that if the legislation is completed in its current form, they will withdraw their business from Israel.

At that moment, various estimates were heard regarding the extent of the potential damage to the Israeli economy, if the threat were to materialize.

This morning, the Israeli Association for Advanced Industries (IATI) in collaboration with Deloitte Israel published the most comprehensive report ever made on the contribution of the high-tech industry to the Israeli economy and society.

The purpose of the report is to identify and measure the contribution of high tech to the Israeli economy while referring to quantitative and qualitative contribution.

The report assesses the industry's impact on the Israeli economy in several dimensions: direct and indirect economic contribution to Israel's economy, contribution to national resilience, improvement of labor productivity in Israel and its impact on changes occurring within the industry itself. The report also refers to the contribution to parallel industries as a springboard for social leadership. The report maps challenges are central to preserving the role of high-tech as the main growth engine of the economy.

According to the authors of the report, over the years, high-tech has served as a solid and significant anchor for Israel's economy in a variety of vital indicators for prosperity and growth. The activity of the high-tech industry constitutes 16.1% of GDP and is produced by 11.9% of the workforce.

It should be noted that the report is not political and does not deal with the subject of legal reform at all, but at the same time, the numbers surveyed in it become a very strong argument in the hands of the leaders of the struggle for the legal revolution, or at the very least - make the threat they voice much more tangible.

The high-tech report in numbers (photo: Israel Association for Advanced Industries)

The numbers speak

The industry counts thousands of companies at different stages of life, from start-ups through unicorns, established companies, public and multinational companies.

Changes in the way of life along with the penetration of technology into all sectors of the economy lead to the fact that technology is not the property of the high-tech industry alone, and technological professions are required in almost every industry.

The authors of the report present numbers that at first glance seem difficult to digest, when their main meaning is: a severe damage to the industry, as many of its leaders claim, will set the Israeli economy back many years, to say the least.

NIS 240 billion - direct contribution of the high-tech industry to GDP in 2021 (about 16% of GDP)

between 2017-2021, 45% of GDP growth in Israel was due to the high-tech industry NIS

50-60 billion - revenues The state taxes the high-tech industry - about 65% of individual taxation.

34% of the income tax is associated with high-tech workers

NIS 310-360 billion - the total contribution of high-tech to GDP, including derivative contributions

67 billion dollars - high-tech exports, about 54% of total exports in Israel

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Karin Meir Rubinstein, President and CEO of the Israel Association for Emerging Industries (Photo: Sivan Farage)

Removing the barriers that will prevent future development of the industry

IATI's high-tech contribution report examines the contribution of the high-tech industry to the Israeli economy and society.

The report was carried out by Monitor Deloitte and is a professional and unique report that will be published every year from now on.

This is the most comprehensive report carried out to examine the contribution of high-tech to the Israeli economy and society.

This is how the authors write: "The unique characteristics of high-tech, derived among other things from the work environment, the extensive scope of activity and the nature of the companies, make it possible to expand the circle of contribution and to have a multidimensional effect on Israeli society as a whole in aspects that are not purely economic.

In order to allow this in the future as well and even to increase the circle of multidimensional influence of high-tech, a response must be provided to a number of significant challenges that may create future barriers.

These barriers include the preservation of the competitive position of Israeli high-tech in the face of the strengthening of parallel markets in the world and barriers in realizing the industry's enormous contribution potential.

Removing these barriers requires dealing with challenges in the field of education, academia, physical infrastructure and regulation."

The authors of the report conclude: "The results of high-tech, and hence the contribution to the economy and society, require business certainty over time in order to be able to continue competing in the challenging international arena."

Hightists demonstrate in Sharon.

Even those who do not agree with you, will not be able to maintain an economy here without them (Photo: Yanon Shalom Yathach)

"Today I am happy to submit the first professional report of its kind on the contribution of the high-tech industry to the Israeli economy and society. On this important document, we have worked at IATI for the past six months together with Deloitte and the contributions identified in the report are based on long-term trends both in terms of the characteristics and roles of the industry and in looking at Growth trends. This report will be published once a year.

The steering committee that dealt with the report included senior members of the high-tech industry, including Adam Fisher, Adi Sofer Thani, Tomer Bar Ze'ev, Shlomo Doberat, Gigi Levy, Prof. Roni Gamzo, Yoni Asia, Eli Groner, Yoram Titz and Yifat Oron As part of the process we interviewed dozens of content experts representing the entire technological and innovative ecosystem in Israel.

As the report shows, alongside a significant economic contribution and the growth engine of the economy in recent years, the unique characteristics of high-tech, derived among other things from the work environment, the extensive scope of activity and the nature of the companies, make it possible to expand the circle of contribution and have a multidimensional effect on Israeli society as a whole in non-economic aspects purely.

In order to make this possible in the future as well, and to increase the circle of multidimensional influence of high-tech, a response must be provided to a number of significant challenges that may create future barriers.

These barriers include the preservation of the competitive position of Israeli high-tech in the face of the strengthening of parallel markets in the world and barriers in realizing the industry's enormous contribution potential.

The technological developments in the last year and the professionalization of talents in many companies in the world accelerate the competition and create economic alternatives.

The results of the high-tech industry, and hence the contribution to the economy and society, as shown in our report, require business certainty over time in order to be able to continue to compete in the challenging international arena" Rotem Dolev, partner and head of technology consulting

"This is a first report of its kind In Israel and around the world that reviews (360) the high-tech industry in Israel for all its contributions to the Israeli economy and society.

The report examines and presents the places where there is a clear contribution of the industry, alongside places where the potential has not yet been fully realized.

The data indicates that the high-tech sector is the growth engine of the Israeli economy and has a significant contribution to GDP, according to which 45% of the GDP growth in Israel in 2022 was due to the sector.

Beyond that, the unique characteristics of Israeli high-tech lead to a contribution spread over a variety of economic and social fields: high-tech is a significant pillar of national resilience and enables social leadership while improving the productivity of the State of Israel.

Alongside this, points in which we saw unrealized potential for contribution and which should be emphasized in the future relate to overall growth and impact on other sectors of the economy.

Although the last year was complex for high-tech, we still saw growth compared to previous years.

The success of high-tech in recent years should not be taken for granted and there are significant challenges that may create future barriers: maintaining strength in the face of global competition, the challenge of human capital and quality personnel, and continued growth and development of companies."

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