Tech Boom Floods Israel's Silicon Valley With Cash, Exposing Divisions

"Tech Boom Floods Israel’S Silicon Valley With Cash, Exposing Divisions". WSJ, 2021, https://www.wsj.com/articles/tech-boom-floods-israels-silicon-valley-with-cash-exposing-divisions-11632562536?mod=hp_lead_pos11. Accessed 25 Sept 2021.

https://www.wsj.com/articles/tech-boom-floods-israels-silicon-valley-with-cash-exposing-divisions-11632562536?mod=hp_lead_pos11

 

An emerging tech boom has surged in Tel Aviv, Israel where investments in entertainment and leisure are quickly changing the skyline of the city, with five new skyscrapers being constructed during this time. 

Nir Zohar, who started at Wix.com back in 2007, is now a chief operating officer in Tel Aviv and has become one of a generation of Israelis who have procured millions through the country's red-hot technology industry, transforming the region. He even went on to state that, "Even if you don't belong to tech, there's a very good chance that it'll be easier to make a living (here) because there's money to be spent." alluding to the fact that Tel-Aviv is becoming an economy to watch and take advantage of for its emerging opportunities for money. 

However, the boom has increased housing and living costs, as well as threatening the wealth gap which affects Israel's cultural, religious, and political fault lines. This could potentially push the Arab and ultraorthodox minorities further to the margins by forcing them out of their residential areas and create long-term issues for their prime minister, Naftali Bennet, and his new government. 

Many Arab citizens who choose to not serve in the army lose the opportunity to gain the skills and social network to thrive in the booming industry, which they believe is the state working against them, due to rising prices and cost of living. However, for those who choose not to partake in such an incredible opportunity, pass the opportunity along to those outside Israel, to the rest of Europe, and potentially the U.S. This has led to tables being booked at some of the best restaurants in Tel Aviv, a record number of mortgages, the record in sales of luxury vehicles, and the hottest topic: initial public-offering parties being hosted for technology companies. 

Much of the money that has created these 13, $1 billion valuated, private companies has come from U.S. Private firms who have contributed $15.1 billion just this year alone in comparison to last year which funded $10.7 billion (2020). From this, another dozen Israeli public tech companies are estimated with a market capitalization of $1 billion or more, and some 35,000 Israelis are sitting on stock equity of more than $14 billion ($400,000 a person) which could within the next two years.

Although this boom seems to have many benefits for the economy, the new wealth has disrupted the disparity, causing tension between the rich and poor in Tel Aviv. The salaries for roughly 338,000 employees within the tech sector are $95,000 which more than doubles the average in other industries; housing for a four-room apartment has even increased to an average of $960,000 which is 70% more expensive than the next 12 cities within Israel. Furthermore, it's becoming increasingly more expensive to hire staff in the country than in any other developing nation. 

Because the progression has escalated so quickly, a shortage of skilled laborers has occurred and more than 60% of companies said they were struggling to fill research and development positions in April. Recently, the government has been searching for new ways to tax windfalls from tech employees cashing in their stock options to level the playing field. In doing so, this becomes the most diverse ruling coalition and includes an independent Arab party, has pledged to invest in educational programs and vocational programs for the underrepresented Arabs and ultra-orthodox Jews in Israel. 

One of the newer policies has planned to cut tariffs on imports which has Israeli farmers furious. For years they have profited from preferential rules that kept prices high. In July, farmers even blocked road junctions with their tractors, tossing eggs into the streets which paused traffic. One farmer even went as far as to say, "If they want a war, they'll get a war.", during one of the ongoing protests.

Will Israel be able to keep up with this boom? Not only are companies opening their spaces out here, but there has been a 126% increase in immigration to Israel from mainly the U.K., The U.S., and France, and well as over 85 other countries. With the migrating crowd, it is hoped that many skilled workers will fill up the needed positions just as cultural diversity has expanded.