Israel Can Cure Mass Coronavirus Unemployment

In an era of perennial pandemic, high-tech remains a growth industry: Israel can turn waiters who serve lattes into techies who sip them

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Retraining for services in high-tech is a generally feasible solution for many unemployed
Retraining for services in high-tech is a generally feasible solution for many unemployedCredit: Getty Images

Six months into the coronavirus pandemic, we now know that the foreseeable future doesn’t belong to tour guides, flight attendants, waiters, musicians or shop assistants. These are all service jobs in the industries that have been crushed by the coronavirus and aren’t likely to be part of any post-pandemic economic recovery.

It’s true that the death of air travel or eating out has been exaggerated. The world would have to turn into something like the backdrop to a Mad Max movie before people give up such basic pleasures. But there probably aren’t many parents who are urging their sons and daughters to become airline pilots or hotel managers these days.

What should they be recommending? The answer is high-tech.

Naturally, you’ll say, “I didn’t need the coronavirus to know that – it’s been the future for decades.” But it isn’t so obvious. Israel’s future as a technology hub is far from assured.

But tech has been one of the few areas of the Israeli economy to weather the crisis unscathed. Startup companies raised more capital in the second quarter of 2020, when the economy was in lockdown, than it did a year earlier when everything was normal. After a small drop in April, Israeli exports of high-tech services jumped more than 10% year on year in May.

The tech sector has an advantage in that workers can easily work from home. But it’s more than that.

Just because your employees could keep working doesn’t mean that investors will want to put money into your startup or that customers will want your services. But, as the figures show, they are. The coronavirus is creating new and long-term demand for tech solutions both in health care and life in general.

There will be more demand for remote services, robotics, big data and (for better or for worse) monitoring.

The opportunity for Israel’s Startup Nation is there for the taking.

But there’s a problem. Israel’s tech sector has hit a silicon ceiling created by a chronic shortage of skilled labor.

Suddenly, seeking jobs

Pre-pandemic, the solutions suggested were to ramp up the number of engineering graduates and start tapping parts of the population – women, Israeli Arabs and the ultra-Orthodox that have long been underrepresented in the industry.

It’s been a slog. Relatively few women pursue tech-related studies and the percentage of Israeli Arabs and Haredim with a higher education remains very low.

The coronavirus has suddenly created vast new pools of job seekers. At first glance, many may not seem to be candidates for high-tech careers. You can’t take someone who’s been serving lattes at a cafe into someone who sips them as he’s coding. Or can you?

Young Israelis in low-skill service jobs (which they’re often working at to pay for higher education) and even many older workers in places such as the travel industry have workplace skills that can be redirected to some tech jobs.

How do we segue low-skilled people into support staff for technology companies?The buzzword solution for coronavirus unemployment in Israel and abroad is retraining. In Israel’s case, government retraining programs are underfunded and often irrelevant to the needs of the job market. The idea that somehow the same government that has bungled much else of the coronavirus is going to effectively spend the billions it’s allocated to retraining is ridiculous.

The money would be better spent subsidizing tech companies that take on unemployed workers for on-the-job or other training that the companies themselves arrange. They’re not going to create engineers in a program of a few weeks or months, but they could turn them into people capable of performing a host of not purely tech jobs, such as sales.

The other half of the solution lies with the high-tech industry itself and its ability to go beyond its startup fixation and evolve bigger businesses.

A startup needs engineers and little else; a big tech company needs a much wider range of professions in marketing, finance, logistics and human resources, to name a few.

Despite all the talk over the years about Israeli high-tech maturing into a real industry rather than a gaggle of startups, the process has been slow. The great majority of startups still opt to sell themselves to a foreign multinational rather than grow into real businesses. One reason is the limited talent pool to staff the kind of jobs a big business requires.

Coronavirus unemployment has suddenly created tens of thousands of candidates.

In the pre-pandemic era they might not have thought to work for a technology company; now their options are severely constrained. In parallel, the opportunities tech offers are growing, as Israeli companies like Fiverr (an online freelance marketplace) or Nanox (digital x-rays) ride high in a post-coronavirus era of remote services. It’s a potentially perfect match, if the government can get its act together to bring the two together.