Israel’s tech job market continues to show signs of a slowdown although the picture that emerges is more complex than a wave of isolated layoffs. A new report by the Israeli Employment Service, which examined changes in the industry’s job market between 2019 and 2026, found a change in the characteristics of job seekers and a prolonged slowdown in the growth rate of employment in the industry.
According to the report, the number of tech job seekers registered with the Employment Service was about 16,300 in May, the highest figure recorded outside of emergency periods. At the same time, their share of all job seekers rose from about 4% in early 2022 to about 11% today. However, the authors of the report emphasize that the increase in the number of job seekers began even before the widespread introduction of AI into the labor market, and that the findings indicate only a correlation and not a causal relationship.
Experienced workers also have difficulty finding work
One of the main conclusions of the report is that the change in the labor market is no longer concentrated only in young workers. Although workers with up to four years of experience still make up the largest group of high-tech job seekers, their relative share is consistently declining. However, the sharpest increase is recorded among veteran workers. Since the beginning of 2023, the number of job seekers with five to eight years of experience has increased by 138%, while the number of workers with more than eight years of experience has increased by 181%. This means that the difficulty of finding a job is also expanding to experienced workers, who were previously considered more stable in the labor market.
At the same time, the distribution of professions is also changing. About half of all tech job seekers today are software employees, a rate that has been on the rise since 2021. According to the data, nearly 8,000 of the job seekers in the industry come from the fields of software development, while the other professions, including engineering, science, infrastructure and management, constitute a smaller share of all job seekers.
Is there a connection to AI
The report also examined the relationship between the expanded use of AI and changes in the job market. According to the findings, among software workers in professions particularly exposed to AI tools, an increase of about 18% was recorded between 2022 and 2026 in the number of job seekers, while in other tech professions with a similar level of exposure to AI, the increase amounted to only about 3%.
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In addition, the proportion of software workers out of all tech job seekers has continued to climb steadily in recent years. However, the Employment Service stresses that it should not be concluded from this that AI is the direct cause of the increase in the number of job seekers. According to the Employment Service, the increase began even before the launch of ChatGPT, and statistical tests carried out as part of the study did not find a significant causal relationship between key events in the development of AI and the increase in the number of job seekers. The main finding is the existence of a correlation between the expansion of the use of technology and the continued increase in the number of job seekers, especially in software professions that are more exposed to it.
A significant slowdown in hiring
Along with the increase in the number of job seekers, the report emphasizes that this is not a contraction of the tech industry but mainly a change in its growth rate. In 2025, the industry employed an average of about 404,000 workers, after the number of employees had almost doubled in the preceding decade. However, since 2023, the rapid growth trend that characterized the industry in previous years has slowed. According to the Employment Service’s assessment, if the growth rate that was prevalent until 2023 had continued, the number of tech workers would currently be expected to be about 461,000.
The gap between the forecast and the actual figure reflects mainly a slowdown in hiring and not a decline in industrial activity. The Employment Service estimates that the upward trend in the number of job seekers is expected to continue into the summer months, before a possible moderation later this year. Employment Service director general Inbal Mashash said that the tech job market is in the midst of profound change, and that workers at all levels of seniority will be required to adapt their skills to the new reality. She said that the Employment Service is already working to expand training and professional retraining programs, among other things by integrating tech workers in technology positions in sectors that are not directly related to the tech industry.
Published by Globes, Israel business news – en.globes.co.il – on July 7, 2026.
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