Israel's State Comptroller’s 60-Page Report on the Local Tech Industry, Did not Say Much

Over 60 pages of a report published Monday by Matanyahu Englman, Israel’s state comptroller, were dedicated to “the Israeli industry’s tech innovation promise,” yet they contained very few criticisms and only some modest recommendations for improvement.

The report touched on the local tech sector’s main woes: a shortage of skilled manpower and lack of diversity, the hardship of translating academic training to the needs of the private sector, the traditional industries’ failure to integrate research and development, and the failure of tech companies to expand outside the Tel Aviv area bubble and set up shop in additional areas including Haifa, Jerusalem, and Be’er Sheva. However, the report tends to overgeneralize, overall taking an archaic approach. In many cases, it blamed a lack of coordination between different government authorities, offering the same general solution of forming better collaborations between them without specifying the desired course of action.

In a chapter about the under-representation of minority groups, for example, Englman concluded that “the various communities in Israel lack the basic skills to enter the tech industry.” Until this changes, the comptroller wrote, Israel’s government investment arm the Israel Innovation Authority (IIA) should, with the assistance of relevant government authorities such as the Ministry of Economy, map out the tech fields into which the Arab and ultra-Orthodox (Haredi) Jewish communities can be integrated. The report fails to mention another significant minority that is hardly represented in tech—the Ethiopian Jewish community, amounting to about 150,000 people, or 2% of Israel’s population, according to official records—though these only include members of the community either born in Ethiopia or born in Israel to a father who was born in Ethiopia.

What the report identified here is one of the biggest failings of the Israeli tech industry, but the comptroller avoided assigning blame to those responsible and did not offer substantial tools to resolve it.

Another issue Englman pointed out is the failure of Israel’s traditional industries to innovate and adopt new technologies. Again, a solid point, as those industries that fail to innovate—by using big data, robotics, and cybersecurity systems in their manufacturing lines—will be the ones to lose their edge to global competitors. The state comptroller had high praise for IIA’s efforts in this field but stated that its services are in low demand from traditional industries. The report does not mention how this situation might be changed for the better, especially considering IIA’s role is not to create demand but to offer technological solutions and funding to support them. If the industry fails to recognize its need for innovation or refuses to receive grants, IIA cannot force it.

The tech segment of the report ends with a vague statement: “it must be ensured that the tools at the disposal of the government and its branches offer a proper, current, and full solution to the continued prosperity of the tech industry.” The report then suggested the establishment of yet another government entity that could oversee Israel’s tech efforts in their entirety and offer the long term strategy to maintain Israel’s technological advantage.

It appears that the only concrete suggestion the state comptroller made is to form another government authority meant solely to oversee IIA’s activity. This would not only be redundant but constitute a step backwards, as IIA was, in the first place, established to free the tech industry from political red tape, as the one entity responsible for coordinating the efforts of all government offices in the field.

A more comprehensive criticism might have questioned whether IIA truly operates independently of the government as it should, or whether it was time to re-examine its budget, which has not seen a significant boost in years. A bigger budget could mean IIA’s impact on the local industry would become more significant, and that it could help the industry break from its dependence on foreign investments, a dependence that was also criticized in the report.

In response to Calcalst’s request for comment, IIA stated it appreciates the state comptroller’s insights and collaboration. The report emphasized the importance of IIA’s activity and the need to expand it, the authority stated. “We hope the report helps us gain the resources and government backing needed to do that,” IIA added.