High-tech employment remains stable, but AI is changing hiring patterns

ISRAEL - In Brief 11 Aug 2026 by Sani Ziv
In recent months, the debate regarding the impact of AI on the labor market has intensified. This has been driven by a growing number of announcements from technology companies about layoffs and efficiency measures. Against this backdrop, a recent survey by the Israel Innovation Authority and Zviran shows that employment in Israel’s high-tech sector remained broadly stable in the first half of 2026, despite the growing number of reports of layoff. The survey covered 210 companies with around 130,000 employees.  The chart below shows high-tech employment both in absolute terms and as a share of total employment. Employment growth has moderated in recent years, with high-tech accounting for around 11.4% of total employment in 2025. High-tech employment: Number of employees and share of total employmentSource: Israel Innovation AuthorityHowever, a growing divergence emerged between software and hardware companies. Layoffs at software companies reached 6.6% of their workforce in the first half of the year, compared with only 1.1% at hardware companies and 2.7% at pharmaceutical and medical-device companies. The divergence partly reflects the growing impact of AI, which software companies are increasingly able to use to accelerate coding, testing and other development processes, resulting in reduced demand for new employees. In contrast, strong demand for processors, computing infrastructure and deep-tech systems continues to support employment at hardware companies. The numbers are consistent with broader labor-market data: Around 15,000 people are currently seeking work in technology occupations, compared with approximately 18,000 vacancies. Overall, the data suggest that...

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