Israel’s tech workforce shrinking – Globes

At first glance, 2025 seems like a year of recovery for Israel’s tech industry. The Central Bureau of Statistics reports that the average salary in the tech sector in September was NIS 33,366, up 6.3% from September 2024.

Israel’s economy as a whole also saw an increase in salaries – the average salary reached NIS 14,058, a nominal annual increase of 4.6%. However, after deducting inflation, this is only a moderate increase of about 2.1% in real terms.

But behind these figures lies a much more complex story in the tech industry. A closer look shows that 2025 was not a year of horizontal salary increases, but a year of profound structural change in the way the industry rewards work and selects its employees.

Fall in the number of employees

One of the key figures for understanding the situation in 2025 is the fall in the number of employees in the tech sector – a decline that has not been seen in the industry for more than a decade. According to data from Ethosia, a leading high-tech and biotech placement company, an actual contraction in the number of employees was recorded for the first time: a 2% decrease from about 417,000 employees at the end of 2024 to only about 409,000 at the end of 2025.

Data from the Central Bureau of Statistics indicate a similar picture. The number of salaried jobs in Israel’s tech industry stood at only 401,800 in September 2025, almost unchanged compared with the previous month, and a negligible increase of only 0.5% compared with last year.

Tech jobs account for 9.9% of salaried jobs in the economy, similar percentages to last year, but unlike previous years, they are no longer growing. For more than a decade, the tech industry has become used to almost continuous growth in the number of employees, even during periods of economic slowdown. Now, 2025 marks a clear break in this trend.

According to the data, 11,500 new jobs were opened in the tech industry during 2025, which is up about 25% compared with 2024. So how is it possible that thousands of new jobs were opened, but the number of employees actually decreased? The answer points to a market where recruitment does not expand the base but rather exchanges and refines it.

Firstly, according to the Ethosia data, the number of enterprises hiring new staff has decreased significantly, from about 1,500 companies in 2024 to only about 1,350 in 2025. At the same time, the data shows that hiring has been concentrated to a limited number of companies, mainly in the fields of cybersecurity, AI and deep tech, and in core positions with high expertise. In other words, this is a more selective market, in which fewer companies are competing for a smaller pool of sought-after talents.

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Moreover, a major portion of the new jobs that have been opened have replaced jobs that have been closed, as part of streamlining processes, refocusing by companies, and exits from the industry. When examining the final result, the conclusion is clear: Israeli tech is focusing less on the number of people and more on staffing critical positions.

The picture becomes even clearer when examining the internal dynamics of the tech labor market. Ethosia data show the number of employees moving between companies each month fell from an average of 1,800 in 2024 to 1,700 in 2025, while the rate of voluntary departures remained stable at 5%. This does not mean a wave of abandonment of the industry, but a slowdown in mobility. Fewer employees are changing jobs, fewer new positions are opened, and the entire system is converging around a smaller and more stable workforce.

In such a reality, the increase in average salaries does not necessarily reflect an improvement in the situation of employees. When the number of employees freezes, or even decreases, but total wage payments in the industry do not decrease at the same rate, the statistical result is an increase on average. In practice, more money is distributed among fewer employees, especially those who are defined as the core of the organizations’ critical activity. The change in the composition of roles and their relative weight pushes the average upward, even when for a major portion of employees, the total income remains unchanged or has eroded after allowing for inflation.

Tightening conditions in the industry

Another key reason why many tech employees earned less in 2025 lies not in base pay, but in the compensation package around it. In an environment of ongoing uncertainty, war, global volatility and pressure from investors, companies have chosen to reduce variable pay components rather than commit to future costs.

Annual bonuses have been postponed or canceled, signing bonuses that were common in 2021-2022 have all but disappeared, and in many cases, employee options and shares have also lost their value due to declines in company valuations. At the same time, related benefits such as expanded advanced training investment funds, additional vacation days and welfare budgets have sometimes been frozen or reduced. The cumulative result has been that for many workers, total income in 2025 was lower than in the previous year, even if the base salary remained unchanged.

Added to this has been a widespread phenomenon of freezing lateral promotions. Many employees have remained in the same position and at the same level for another year with stable wages, but with erosion in purchasing power and a growing gap from the senior executives and critical talent. This is a quiet but effective mechanism for adjusting costs: not sweeping wage cuts or an unusual wave of layoffs, but rather a curbing of internal growth and a deepening of gaps within the organization. In this sense, 2025 was not a year of cuts, but a year of belt tightening. Money remained in the system, but flowed in narrow, focused and much more selective channels than before.

Another striking feature of the tech salary market in 2025 has been the gaps between different areas of activity and positions. Even within the industry that leads the economy’s salary charts, not all positions benefit from the same trend. According to Central Bureau of Statistics data, the information technology and communications industry recorded an average salary of approximately NIS 33,600, the highest in the economy by a considerable margin. However, beneath this average lies a very sharp distribution between sought-after core roles and roles that have been pushed to the margins.

Ethosia’s data clearly illustrates this polarization. At the top of the pyramid are AI, data, and data engineering roles, where the average salary reaches NIS 54,500 and even more in specialist roles. Cybersecurity also recorded a relatively sharp increase of 9% in the average salary, mainly in cloud security, AppSec, and security architecture roles.

Advanced hardware development roles, mainly in the fields of chips and deep tech, also enjoy stable demand, and an average salary of NIS 36,000 for those with approximately five years of experience. Back-end developers are slightly below, at around NIS 35,000, while full stack roles earn an average monthly salary of NIS 31-32,000.

On the other hand, in more general technological roles, such as QA, IT, technical support or development roles that are not at the core of the product, salaries have remained stable at best and have eroded less in real terms at best. Product, technology marketing and operations roles have also seen a slowdown in salaries, with fewer promotions.

The result is a two-tier market: a limited layer of deep roles that enjoy demand, competition and rising wages, and a broader layer that is experiencing stagnation, even if it is not leaving the market.

These gaps are evident within the tech sub-sectors. The software and computer consulting fields lead the salary table with levels of over NIS 36,000 on average, while the IT and communication services fields saw significantly lower wages, sometimes around NIS 22-28,000.

What to expect looking ahead

If the trends of 2025 continue into 2026, the Israeli tech industry is expected to continue to converge. According to Ethosia’s estimates, automation will deepen, and demand will continue to focus on core, highly specialized roles in the fields of AI, data, and cybersecurity, while intermediate and non-business-critical roles will continue to be marginalized or will not be re-staffed as employees leave.

At the same time, organizational tolerance for inefficiency is expected to continue to decrease, as part of the transition to leaner, more cautious management. In such a reality, the gap between the average salary and the income experience of many employees could widen even further.

Statistical salaries may continue to rise, but mainly as a result of the same targeted compensation for executives and critical talent, rather than a broad improvement in employment conditions. For a significant portion of employees, this will mean continued stagnation, real burnout, and ongoing pressure to prove professional relevance.

As of today, Israel’s tech industry has entered a more mature, limited, and selective phase than we have known in the past decade. This is not an acute crisis or employment collapse, but a structural change of direction: fewer employees, more focused money, and wider gaps within the industry.

2025 was not a year of wage boom, but a year of realignment. High-tech profited and became more efficient, but for many workers it was a year of quiet stagnation and the realization that the old rules no longer apply.

Published by Globes, Israel business news – en.globes.co.il – on December 23, 2025.

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