18,000 jobs cut from high-tech: 'AI is making workers redundant'

Despite a slight increase in high-tech employment in June to 426.4 thousand, the sector is still about 18 thousand workers below February's level. Leader Capital Markets attributes the trend to AI penetration and the shekel's depreciation, but the shekel has weakened significantly since then and layoffs continue. Monday, Wix, Rapid and MyHeritage have laid off thousands of workers, indicating a deep change in the workforce structure.

The Israeli labor market appears tight, but the high-tech sector shows a retreat trend. According to Leader Capital Markets' review, the number of high-tech employees rose in June to 426.4 thousand, compared to 421 thousand in May, but it is still about 18 thousand workers below February's level, when 444.6 thousand were employed. This is a decline of about 4.1%. Leader attributes the trend to AI penetration and the shekel's depreciation, but notes that the shekel has weakened significantly since then, while layoffs continue, indicating a deeper change in the workforce structure. The prominent example is Monday, which announced layoffs of about 620 employees, about 20% of its global workforce, of which about 350 in Israel. The company explained this as adapting to an era of work integrated with AI agents. Wix also laid off about 20% of its employees in May, nearly 1,000 people, and Rapid underwent an organizational change that included laying off dozens to more than 100 employees. MyHeritage laid off about 15% of its workforce in July, about 75 employees. The strong shekel hurt the profitability of companies with dollar revenues, but it at most accelerated a broader process: software companies are discovering they can develop, test, and support products with fewer employees. The slight increase in June is not necessarily a sign of a trend reversal, but may reflect a monthly fluctuation within a process where the link between revenue growth and employee growth is weakening.