Imagine a country where one industry proudly leads the economy but a fifth of the population hardly takes part. High-tech has been a key component in the Israeli economy’s growth in recent decades, significantly reducing the damage caused by the pandemic over the past year and a half. The Arab community’s participation in high-tech, however, presents a very worrying picture.
Only 1.2 percent of salaried Arab employees worked in high-tech in 2019, compared with 10.7 percent for the Jewish community. The main reason is schooling, all the way through university. Economist Elad Demalach of the Bank of Israel has examined the integration of the Arab community into high-tech, exploring the differences between Arab employees in the sector and their Jewish colleagues.
In 2018, Arab Israelis made up 17 percent of students at universities and colleges, lower than Arabs’ share in the working-age population, 25 percent. Their representation among Israelis studying high-tech professions was even lower: 12 percent in 2018, though up from 8 percent in 2012.
In 2018, only 4 percent of the degrees earned in high-tech were earned by Arab Israelis, and only 3 percent of all young Israeli high-tech employees were Arabs. This seems to show that much of the inequality between Jewish and Arab employment in the industry stems from differences in education.
Meanwhile, research shows that among Arab Israelis who are between 36 and 46 today, only half who began studying high-tech fields completed a degree, compared with 68 percent for the Jewish community.
It’s possible that the differences here also stem from difficulties in learning Hebrew, as most Arab Israelis study in their native language at school. Citing these findings, the Bank of Israel says the country needs a program supporting and monitoring Arab students studying high-tech.
Another barrier is that Arabs don’t live near where the jobs are. A clear majority of Israeli high-tech companies are located in the center of the country, most in the Tel Aviv area.
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In 2019, 62 percent of high-tech employees worked in Tel Aviv or elsewhere in the center. Only 12 percent of the Arab community lived in this region, while half the country’s Jewish population lived there.
The Bank of Israel says the new normal launched by remote work during the pandemic might help the Arab community in this regard.
But there’s another theory: Arabs lack the connections that many Jews have; for example, from technology units in the military. The tradition of “friends bringing in friends” makes it harder for Arab Israelis to find their way into high-tech. The study notes, however, that Israel’s shortage of high-tech employees could increase companies’ willingness to diversify their recruiting and testing methods.
The struggle doesn’t end when you’re hired
Still, the number of salaried Arab employees in high-tech almost tripled between 2012 and 2019 – from 2,200 to 6,100.
According to the Council for Higher Education, between 2012 and 2018 the number of Arab students studying for a B.A. in high-tech professions doubled, rising to 12 percent of the total number of students in these fields. According to the Labor, Social Affairs and Social Services Ministry, while only 30 percent of Arab Israelis with degrees in high-tech in 2012 worked in the industry, by 2017 this figure had doubled to 60 percent.
But Arabs also have problems in the type of industries and salaries. From 2012 to 2017, only 59 percent of the Arab Israelis in high-tech worked in the core businesses – as programmers and engineers – compared with 71 percent of Jewish employees.
Most Arab employees worked in high-tech industry, 54 percent, while most Jews worked in high-tech services, which generates higher revenues and growth. High-tech services include software and R&D, while high-tech industry focuses on the production of goods such as computers and accessories, electronic devices and pharmaceuticals.
According to the data, 57 percent of Jews in high-tech work in services and 43 percent in industry, while for Arabs these numbers are 46 percent and 54 percent. And things could worsen for the Arab community in this regard, as the trend over the past decade has been stagnation on the industrial side and growth in services.
The differences are also reflected in the inequalities in salaries. For 2018 and 2019, Jewish employees in high-tech earned on average 31 percent more than their Arab colleagues, a bit higher than in other industries. Much of this gap stems from the differences in professions; for example, the number of Arab high-tech employees who work in production or nonprofessional jobs is 28 percent, almost three times the figure for their Jewish counterparts.
Refuge in a time of crisis
During the COVID crisis, Arabs in high-tech were affected much less than Arabs in other sectors. Employment of Arab Israelis in high-tech from March to December 2020 fell by only 5 percent form the same period a year earlier. This compared with a 21 percent drop in Arab employment in the rest of the economy, a difference greater than in the Jewish community.
According to the Bank of Israel study, high-tech employees have rapidly adapted to remote work during the coronavirus crisis – and the potential exists to make high-quality employment available in the country’s outskirts where most Arab Israelis live. The continued integration of Arab workers in high-quality high-tech positions can accelerate their integration into the economy and society while letting the high-tech sector realize its full human capital.
Because much of Arabs’ low participation in high-tech stems from inequalities in their early years, the Bank of Israel says it’s vital to increase investment to improve Arab schools and reduce the achievement gap between Jews and Arabs – the whole way from preschool to university.
The central bank also recommends affirmative action in increasing class hours. This would be based on differential funding for schools, new tools for attracting high-quality teachers to Arab schools, and allocating more resources for the core subjects. Also, there would be efforts to get more Arab students majoring in computer fields, where there is currently a shortage.