Work From Home Is Here to Stay, and Israelis Are Going to Feel It

The shift to working at home full time or adopting a hybrid model is forcing the Israeli economy to adjust to a new reality. Experts say the impact will be felt not just financially, but culturally as well

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Empty Tel Aviv offices during the coronavirus pandemic, in 2020.
Empty Tel Aviv offices during the coronavirus pandemic, in 2020.Credit: Eyal Toueg
David Rosenberg
David Rosenberg

Has working at home become the new normal in Israel? That’s the question everyone – workers, employees, real estate developers, city planners and architects – is asking.

So far, however, the answer has been a frustrating yes and no. On the one hand, far more Israelis are working all or part of their week at home than before the coronavirus pandemic, and a resurgent virus promises to increase that number. On the other hand, it will take time for homes and offices to be reconfigured for the new world of work. Moreover, large parts of the economy can’t be adapted for remote work, and where it can be done, employers and employees are often anxious about the change.

Ronen Yehoshua, CEO of the cybersecurity company Morphisec, is on board as far as remote work is concerned. During the pandemic, he closed the company’s offices in Israel and the United States and sent everyone to work from home. As the restrictions were lifted, the company moved to the “hybrid” model, with staff working some days at home and others in the office.

But Yehoshua is concerned that the innovative juices crucial for high-tech companies to thrive may run dry if employees aren’t in constant face-to-face contact.

“Many would say there’s no productivity issue; we know how to work from home. We have the tools,” Yehoshua says. “But I’m sure there is less productivity, because people aren’t speaking to each other face to face.”

At the same time, remote work has enabled the company to stretch its employee-recruitment net far from its Be’er Sheva headquarters – a major benefit during a severe worker shortage, especially in cybersecurity. To make sure staff from the center of the country come to the office on a regular basis, Morphisec has rented space at a WeWork facility in Tel Aviv.

Employees at the Morphisec offices, in March.

A privilege for the wealthy

A survey by the Israel Democracy Institute found that last month, even after the most severe COVID restrictions were lifted, more than a third of Israelis said they were working completely or partially from home. That was down from a peak of 55 percent in the spring of 2020 – the first weeks of the pandemic – but far higher than the nine percent who did so before the coronavirus. With the spread of COVID variants and talk of a new lockdown, those numbers will almost certainly rise.

Not everyone is part of the trend. Remote work is an option for the wealthy: 46 percent of people earning 25,000 shekels ($7,750) a month or more said they work completely or partially from home, double that of Israelis earning 10,000 or less. According to the poll, two-thirds of high-tech workers – who are mainly educated and white-collar – said they were working from home all or some of the time in July.

Prof. Michael Naor of Hebrew University, who has researched the impact of COVID on remote work, says that remote work may open up employment opportunities for groups that have been pushed to the margins of the labor market, and particularly in high-tech.

“The positive thing that came out [of the coronavirus] is that people located in the periphery in Israel – for example, Israelis Arabs and ultra-Orthodox Jews – can now telework. Previously, if someone was living in Tiberias or the Galilee, they couldn’t take a job in Tel Aviv,” he says of commuting from more inaccessible areas in northern Israel. “Someone living in Tiberias can come to the office in Tel Aviv one day a week –that’s realistic.”

The challenge here lies in these populations’ gap in computer skills, as well as for older and less educated Israelis in general, some of whom do not even have internet access. This may explain the drop in recruitment of Israeli Arabs, Haredim and the disabled during the coronavirus, according to an employer survey by the Maala, a non-profit promoting corporate social responsibility. The same survey, though found that employers were offering a lot more digital-skills training for older and lower-level employees.

Company culture

Even though tech companies are naturally poised at the forefront of the work-from-home trend, remote work isn’t always an option in that field. Companies outside the software sector often need to perform tasks in a physical space, and many more need to conduct on-site product trials and installations

COVID struck just as the startup Sufresca was just about to begin trials of the edible coatings it developed to replace plastic wrapping for fruits and vegetables. The trials were supposed to be conducted in a lab, but the lab was closed, CEO Efrat Ferri recounts.

Instead, the trials were conducted by employees – including herself – in their homes, using avocados, peppers, cucumbers and mangos. When one trial was over, Ferri says, she had 200 kilos of avocados to give away to neighbors.

It took longer to complete the trials that way, but Sufresca was able to get regulatory approvals simultaneously. Between COVID waves this spring, the company was able to demonstrate the technology to potential European customers. Unfortunately, though, the window of opportunity has closed again, and there’s only so far creative solutions can go in overcoming the absence of face-to-face contact.

“We have many potential customers in Mexico, but we can’t go there because of the situation. We plan to go there in two to three months, if possible, but right now the situation in Mexico is terrible,” says Ferri.

Financially, remote work amounts to big savings for employers, but they have to weigh those against soft factors, like the risk of diminished company loyalty, comradery and preserving a semblance of corporate hierarchy in a work environment where no one has a corner office or a bigger desk.

“It’s not only a monetary decision, but a cultural decision. When you work in an open space it’s part of the DNA – the company’s culture – the interactions between employees, the brainstorming. It’s easier to brainstorm in an open space than when people are on Zoom,” says Naor.

A coworking space in the Selina hostel in Tel Aviv, last year.Credit: IDAN SAIDI

In a survey, Naor found that workers tended to spring for a hybrid model. Out of those he surveyed, 26 percent preferred to come into the office two days a week, and 36 percent preferred three days a week. The fact that hybrid arrangements have become the dominant mode may explain why there has been no mass exodus of office workers from Tel Aviv or other business centers, and why rush-hour traffic seems as bad as ever.

A market survey by CBRE, the Israeli unit of the global real estate company Coldwell Banker, found that while occupancy rates for office space took a dip during the worst of the pandemic last year, they began rising to 95 percent in the second quarter. Rentals rose 4 percent year on year.

“These threats [of full-time remote work] in the Israeli market are not high because most office workers are expected to return to work,” CBRE wrote. The labor market is turning into a ‘hybrid’ one, where remote work will find its place as complementary to on-site physical presence.”

Rethinking the home office

If workers are going to work from home more often, that will have a profound impact on the housing market. People in the industry say, though, that the changes haven’t quite happened yet, partly because homeowners and builders are hedging their bets.

Aldar Marketing told Yediot Aharonot that 45 percent of homebuyers in the 90 projects it now has underway had asked for changes to their home design to create a workspace. CEO Roni Cohen said 30 percent of his projects already offered a work-from-home solution. In many cases, that means taking what was once a public space in an apartment complex used for social activities or fitness and turning it into a shared office space.

The real transition, which is only just starting, will involve more far-reaching changes than making sure there’s a work corner in an apartment or some shared space on the ground floor of a residential complex.

Charlie Yawitz, a partner in the Tel Aviv firm Price Piltzer Yawitz Architects, says that neighborhoods themselves will transition to mixed-use ones that that comprise a mélange of housing, offices and shops. With it will come a change in the notion that each facility’s use has to be fixed – that an office is an office and can never become a home.

“More and more people are going to live in areas that are not cordoned off as residential or just offices,” he says. “That will create a lot of flexibility in what landlords offer and the way that people use space.” He elaborates: “ Say I built this floor for 1,000 square meters of office and 300 meters of homes – now I’m going to shift it the other way around.”

His firm is planning a neighborhood like this in Kfar Sava’s old industrial area. Called Park Hamovil, the area is currently awaiting regional planning approval. Meanwhile, the 2021 Budget Arrangements Law includes legislation that will allow office-building owners to convert up to 30 percent of existing office space into apartments.

“People’s attitudes are shifting as they ... realize that there doesn’t have to be two separate environments,” says Yawitz. “People’s work life isn’t that different from their home life. It’s not like most people are working in noisy and dirty factories – they’re sitting in front of screens, and that’s not much different from the residential model. So the two can be more easily integrated.”

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