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Survey finds Israeli tech workers taking Covid-19 salary cuts on the chin

Survey finds Israeli tech workers taking Covid-19 salary cuts on the chin

While wages have been cut, the drop in income has been relatively small and the sector is still expected to pull Israel out of the crisis

Maayan Manela | 13:39  25.06.2020
Almost half of the companies in Israel's tech industry cut salaries in the past couple of months and over 20% put employees on unpaid leave, a survey conducted by the Israel Innovation Authority (IIA) and consulting firm Zviran discovered.

Some 46% of the 180 companies questioned said they had reduced salaries during the months of April and May, compared to just 36% who said they did so in March and April.

Working from home. Photo: Shutterstock Working from home. Photo: Shutterstock Working from home. Photo: Shutterstock

The cuts were mostly minor, with 29% reducing salaries by less than 15% and 28% deducting less than 10%. Around 15% of the companies cut paychecks but also reduced working hours.

Some 22% of companies said they placed employees on unpaid leave during the crisis, with 13% firing workers.

"Salaries in the tech market haven't dropped significantly. There was a fair share of companies that cut salaries and many did so while also reducing hours, but you can't really say that salaries in tech have fallen," said Sarig Gafny, managing partner at Zviran. "What you can say with certainty is that the increases are not what they were prior to the crisis."

Despite the crisis, some companies are continuing to recruit, although 78% said that they either stopped or slowed down new hirings during the months of April and May. Only a fifth of the companies in the survey said they are continuing to recruit new employees the way they had planned prior to the crisis.

"Compared to other sectors, tech is displaying relative strength and the situation is far less serious, with fewer layoffs and less employees being put on unpaid leave. The industry is continuing to function," said Naomi Krieger Carmy, Head of Societal Challenges Division at the IIA, the government's tech investment arm. "Nevertheless, there is a lot of uncertainty which is demonstrated in the slowing and stopping of many recruitment processes, as well as cautiousness moving forward. A lot of companies are on the fence."

A different survey by GotFriends, a company specializing in tech talent recruitment, showed that 70% of companies that had previously postponed recruiting returned to look for new employees during May, but in a reduced fashion compared to prior to the pandemic.

GotFriends’ survey, which included data from 2,200 recruitment processes in 500 different companies, showed that compared to last year salaries have actually risen, with new recruits being offered NIS 32,500 on average (approximately $9,450) during May compared to NIS 28,500 ($8,280) in the same month last year.

Another significant change that illustrates the uncertainty in the market is the 40% rise recorded in applications for senior positions. CEOs, development managers, and other top managers are sending in resumes for open roles, a rarity prior to the pandemic.

"More senior managers are no longer sure their startup will succeed or don't agree with the decisions of the board or are unsure they will be able to raise more money," explained Gotfriends CEO Shiri Vax.

In addition, Gotfriends found that the time it takes for open positions in the tech industry to be occupied has been cut by almost half over recent months, going from 65 days prior to the pandemic to 35 days. In the past companies would take an average of 5-7 weeks before completing a hiring while now the entire process lasts between 1-3 weeks.

"There are many more candidates for each position. These are quality and senior candidates and they are also more available to complete the process as they are working from home," added Vax. "With fewer companies recruiting, candidates also have fewer options to consider, and the process itself is also largely done online."

The tech industry may not have come through the pandemic unscathed, but Hagay Levin, Chief Strategy Officer at the IIA, believes the industry still presents many opportunities and will be leading growth when the crisis ends.

"We entered the crisis with a huge shortage in specialized employees and companies are recognizing that this is their chance to recruit," said Levin. "Those people who struggled to find jobs before the crisis, like someone inexperienced, a minority or an older person will find it even tougher now as the market isn't as desperate. Nevertheless, tech leads the way in high-paying positions and we estimate that once the crisis ends the first sector that will grow will be tech. So, therefore, anyone considering making a career change to tech should still seriously consider it as there is an opportunity here."

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