Israel's Tech Sector in Crisis: Strong Shekel Threatens 40,000 Jobs as Firms Prepare to Relocate

The Currency Crisis Hitting Israel's High-Tech

Israel's booming tech industry is facing an unprecedented threat: a surging shekel is making local labor costs skyrocket, pushing companies to consider massive layoffs and relocation abroad. The math is stark: with an average monthly salary of 30,000 shekels and the dollar dropping from 3.53 to below 3 shekels, each worker now costs employers $10,000 per month instead of $8,500—a $1,500 increase per employee.

Ronen Nir, partner at PSG Venture Capital, calculates that this added cost across 400,000 tech employees amounts to 21 billion shekels, equivalent to the cost of employing 40,000 workers. In other words, 40,000 jobs are at risk of being moved overseas to cut expenses.

Emergency Meeting with Finance Ministry

On Wednesday, senior Finance Ministry officials held an emergency meeting with top tech leaders, including Microsoft Israel's Managing Director, Meta Israel's General Manager, and representatives from Nvidia and Google. The group agreed to form a team to propose immediate solutions. The consensus: action must be swift, as layoffs and relocations could trigger a "tsunami."

Proposed Solutions

• Expanded startup grants: A 1 billion shekel emergency fund (up from 400 million in previous crises) to cover monthly expenses, later repaid as a percentage of revenue.
• Tax credit relief: Easing the cost of tax credit points paid by employers to reduce labor costs without cutting net salaries.
• Paying corporate tax in dollars: Under discussion with multinationals like Nvidia and Google, but not relevant for unprofitable startups.
• Municipal tax discounts for major exporters.

The Bigger Picture

This crisis is not new—it's the culmination of three years of turbulence: the judicial overhaul debate, the war, long reserve duty, and flight disruptions. For the first time, Israel's high-tech sector saw a decline in R&D jobs in 2025, and over 50% of startups now register abroad, up from 30% a decade ago.

Alon Ben-Zur, chairman of the High-Tech Association, warns: "Knowledge is leaving Israel, harming not just tech but the entire economy." The strong shekel is the final trigger that could accelerate this exodus.

What's Next?

The Finance Ministry now recognizes the urgency, especially after seeing exceptional tax revenues from major exits (Wiz, Armis, CyberArk) that helped reduce the deficit. Losing those future revenues is a tangible fear. The team must deliver recommendations quickly, without relying on legislation, especially with elections approaching.

From left: Michal Braverman-Blumenstyk (Microsoft Israel), Arik Kleinstein (Glilot Capital), Adi Soffer Teeni (Meta Israel)