Artificial intelligence is beginning to reshape the labor market and contribute to rising unemployment in professions most exposed to it. It is responsible for about 15% of the increase in unemployment in programming roles in recent years and about 18% among telemarketing sales representatives, according to a new study.
Economist Michael Dvashoi and Professors Gil Epstein and Avi Weiss of the Taub Center for Social Policy Studies conducted the research.
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A high-tech programmer. 'The occupational composition of the unemployed in Israel is changing before our eyes'
(Photo: Yuval Chen)
The impact of AI is concentrated in professions that until recently enjoyed exceptionally high demand, low layoff rates and persistent hiring shortages. These include software development, content creation and lower-wage roles such as telemarketing. These fields recorded particularly low unemployment rates in 2022 but are now experiencing the sharpest increases.
According to a Central Bureau of Statistics business trends survey, as of June 2025 employers of about 3% of workers in Israel reported reduced demand for employees due to the use of artificial intelligence. About half of this decline is reflected in hiring freezes, while the other half comes from workforce reductions. The effect is especially pronounced in the high-tech and finance sectors, where employers reported a 5.5% cut in staffing levels.
The findings show a significant rise in the share of unemployed workers coming from occupations at high risk of automation. While between 2019 and 2022 such workers accounted for about 14% to 16% of all unemployed in Israel, by 2025 their share had climbed to between 20% and 25%. Job vacancies in these professions have also declined accordingly.
“The occupational composition of the unemployed in Israel is changing before our eyes,” Dvashoi said. “We are seeing more and more people who previously worked in high-tech, finance, sales, customer service and content creation, fields where artificial intelligence is beginning to play a significant role.”
The researchers note that rising unemployment in high-tech is also driven by additional factors, including a slowdown in the sector and a growing share of occupations at risk of automation in the labor market.
Among software developers, AI accounts for between 12% and 20% of the rise in unemployment recorded between 2022 and 2024–2025. Among sales representatives, it accounts for between 10% and 26% of the increase.
“The era of immunity for high-tech workers is over,” said Epstein, head of the Taub Center’s labor policy program. “Our data shows that artificial intelligence is reshuffling the deck.”
A related trend is a growing preference for experienced workers and increasing difficulty for juniors entering the field. AI enables skilled, veteran employees to become significantly more productive. A U.S. study found a 13% decline in employment among young workers aged 22 to 25 in occupations at risk of automation, while older workers were largely unaffected. In Israel, this trend is particularly visible among programmers.
“Juniors are the first to pay the price,” Epstein said.
Weiss, president of the Taub Center and a co-author of the study, said the shift reflects a bigger structural change.
“We are seeing a process in which technology not only replaces labor but fundamentally changes the rules of the game,” he said. “For the unemployed, this means competition for existing jobs is becoming much tougher, and those who do not adapt their skills to the AI era risk being pushed out.”