The math behind the crisis is simple. With an average monthly salary of 30,000 shekels and an average dollar rate over the past decade of 3.53 shekels, each high-tech worker costs an exporting employer about 8,500 dollars a month. At an exchange rate of 3 shekels per dollar, that same worker already costs 10,000 dollars a month, an increase of 1,500 dollars.
Ronen Nir, partner at the PSG venture capital fund, calculated based on these historical figures that given 400,000 employees in the high-tech sector, the added labor cost amounts to 21 billion shekels. That is the cost of employing about 40,000 workers or, in less polished terms, the number of jobs already at risk of being moved out of Israel in search of cost savings.
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Based on these historical figures that given 400,000 employees in the high-tech sector, the added labor cost amounts to 21 billion shekels
(Photo: Yuval Chen)
In practice, the dollar is already below 3 shekels and the average salary has jumped, according to data published last week, to 38,000 shekels, making the added burden even heavier and the number of vulnerable jobs even larger.
Although the dollar strengthened over the weekend after sharp declines on Wall Street and is now trading around 2.96 shekels, all major economic actors, including the Bank of Israel, acknowledge that this time the situation is not fully under the central bank’s control. The exchange rate is being driven more than ever by the Trump administration’s push to weaken the U.S. currency, the rally in U.S. equities and a decline in Israel’s risk premium. As evidence, the dollar has weakened in double-digit terms not only against the shekel but consistently since January 2025, the start of Trump’s second term in the White House, also against major currencies including the euro and Swiss franc.
Nir made this alarming calculation in early May, shortly after the dollar first fell below 3 shekels. Only a month later, and after a quarter-point rate cut that barely affected the shekel, officials at the Finance Ministry understood this was not a temporary fluctuation but a real threat to the economy’s growth engine. It is no longer just “spoiled” high-tech, but the entire economy.
On Wednesday, senior Finance Ministry officials including Accountant General Michal Abadi-Boiangiu, Budget Department Director General Maharan Frozenfar and chief economist Shmuel Abramzon held an emergency meeting with senior figures from the local tech industry. At its conclusion, it was decided to establish a team to formulate immediate recommendations to neutralize the impact of the strong shekel. The severity of the issue across the industry is reflected in the high-profile list of participants from the sector.
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Michal Braverman-Blumenstyk (from left), Microsoft Israel R&D Center Managing Director; Arik Kleinstein, co-founder of Glilot Capital; Adi Soffer Teeni, General Manager of Meta Israel
(Photo: Yuval Chen, Orel Cohen, Tommy Harpaz)
Also participating were Dror Bin, CEO of the Israel Innovation Authority, representatives of the Growth Companies Forum representing a wide range of large public and private tech firms, and the high-tech association within the Manufacturers Association, which presented a survey revealing alarming figures.
According to the survey by the High-Tech Association, conducted in May among dozens of companies employing a total of 12,000 workers, most firms are preparing for a margin erosion of 15% or more, leading to layoffs and relocation of parts of their operations abroad. These companies span all sizes, from large multinational firms to early-stage startups. Precisely because they are so diverse, the proposed solutions must also be varied.
Calcalist revealed this week that negotiations are already underway between Nvidia and Google and the Finance Ministry over the possibility of paying corporate tax in dollars. However, such a solution is not relevant for startups that are still unprofitable and pay little direct tax, yet suddenly find themselves with far less runway than expected. The consensus was that any solutions must be implemented quickly and cannot rely on legislation, especially so close to elections.
“We need to act fast because layoffs will be immediate and job relocation will happen quickly, otherwise there will be a tsunami,” said Arik Kleinstein from Glilot Capital, who is usually very measured in his remarks. Glilot is invested in dozens of cybersecurity companies which are not, in theory, facing funding issues due to the sector’s strength, but in practice are still affected. “If the industry raised $15 billion in 2025, that number is effectively shrinking to $12 billion, meaning companies urgently need to raise more capital now.”
Kleinstein proposes immediately reactivating the mechanism developed by the Israel Innovation Authority during the COVID-19 period and again at the start of the 2023 war, in which grants are later converted into loans repaid as a percentage of revenue. “This time a 400 million shekel emergency fund, as used before, will not be enough. We believe at least 1 billion shekels should be allocated,” he said. The grants to startups would cover a fixed share of monthly expenses and later be repaid once they reach significant sales.
Ahead of the discussion, the High-Tech Association prepared a position paper including a range of relatively creative proposals, not just calls for Bank of Israel intervention or interest rate cuts. Among them were municipal tax discounts for major exporters and easing the cost of tax credit points paid by employers. This would allow employees to keep the same net salary while reducing employer costs. The association expects additional measures to emerge in talks with the Finance Ministry aimed at lowering shekel-denominated payments to the state.
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Chief Economist Shmuel Abramzon (left) and Alon Ben-Zur, chairman of the High-Tech Association
(Photo: Orel Cohen and Bynat)
“Just the fact that the meeting took place this week, initiated by the Finance Ministry, is already a positive signal and now the team must move quickly toward immediate decisions,” said Alon Ben-Zur, chairman of the High-Tech Association and CEO of Bynet Data Communications, in a conversation with Calcalist. “The survey we presented surprised even us with its worrying data. The average salary figures published last week, showing a sharp rise, are also concerning because they are driven by the high salaries paid by global companies operating here. They are willing to pay a lot for a relatively small number of employees working on the most critical and complex technologies, but at the same time they are moving many other roles out of Israel that require simpler development work. It is also due to a decline in hiring junior engineers.”
Ben-Zur added that “a dangerous situation is forming in which knowledge is leaving Israel, which will harm not only the tech sector but also broader industries across the economy.”
The strong shekel is seen as the final trigger that could deepen damage to Israel’s high-tech sector, which has already begun, for the first time in its history, to relocate development jobs abroad over the past year. This follows three years of turbulence that began with domestic uncertainty during the judicial overhaul debate and intensified with the outbreak of war, long reserve duty periods and air travel disruptions. Data from the Aaron Institute, reinforced by the annual report of the Israel Innovation Authority published last week, show that in 2025 there was a first-ever decline in R&D jobs in Israel. This comes alongside an increase in startups registering abroad, which reached more than 50% last year compared to about 30% over the past decade.
Participants in the Zoom meeting with the Finance Ministry came away with the impression that there is now real urgency in Jerusalem as well. The assessment is that after the Budget Division saw the exceptional tax revenues from exits by Wiz, Armis and CyberArk, which reduced the deficit despite massive defense spending, the fear of future revenue loss has become much more tangible.