Israel Innovation Authority launches a new fund to develop human capital in tech

The Israel Innovation Authority (IIA) has decided to change the way it operates in the field of human capital in the Israeli tech sector. Instead of implementing several pinpointed programs, the government’s tech investment arm is announcing a fund dedicated to developing human capital for the industry that will fund development initiatives in areas identified as important by the IIA. The government agency will invest NIS 7 million (approximately $2 million) in the fund by the end of 2020 and at least NIS 20 million ($5.9 million) next year. The IIA’s newly announced plan is unrelated to a separate employment stimulus program published by the ministries of finance and economy this week.

Up until the Covid-19 outbreak, a shortage of skilled employees was the tech sector’s constant challenge. At any given time there was a deficit of 10,000 people, mostly programmers and data professionals. The coronavirus crisis may have freed up some of the people, but according to IIA CEO Aharon Aharon, the sector is still lacking a huge number of people. “There is still a deficit of 10,000 R&D workers and more junior employees were laid off than veteran professionals,” he said in an interview with Calcalist. He said he thinks that the outbreak offered a good opportunity to bring back to Israel jobs that were outsourced to places like Ukraine and other Eastern European countries. “There is no reason to employ people in Ukraine when we can employ them here in Israel,” he said.

The fund, whose goals were established in coordination with the employment branch of the Ministry of Welfare, will issue grants for new programs and models for expanding the entry points to the industry and improving and maintaining quality personnel in the fields of research and development.

“This period, in which hundreds of thousands of Israelis have found themselves unemployed, also provides an opportunity for the Israeli economy to retrain a portion of them for R&D positions in the high-tech industry. This new fund will integrate re-skilling for those with significant potential to contribute to the high-tech industry – with a focus on training job seekers for R&D positions – and up-skilling for current employees in this industry, who will receive specialized training, which would offer added value to companies. The demand for high quality, skilled human capital continues to be a significant challenge for the Israeli high-tech industry’s efforts to innovate and maintain its competitive leadership position in the global market," Aharon said. "In order to provide an appropriate response to today’s challenges as well as an incentive for corporations and non-profits to implement solutions for training human capital in the knowledge industries, the Israel Innovation Authority Council approved the establishment of this fund to stimulate human capital development in high-tech."

The move signals a strategic change in the IIA’s approach to providing an extensive solution to these challenges. The IIA's program will offer grants to programs that will provide a partial or complete solution to expanding the channels of entry into the sector and preservation and improvement of existing quality human capital.

The grants will support social and enterprise projects, including the generation of new models, expansion of existing projects that will lead to significant progress in reducing manpower shortages and contribute to increasing the number of players in the field.

The program will put an emphasis on prioritizing the inclusion of under-represented parts of the public, such as women, Arab-Israelis, ultra-Orthodox Jews, descendants of Ethiopian immigrants, people with disabilities, and on increasing activity in Israel’s periphery.

The fund’s first call for proposals will be receiving applications until October and will focus on the following priorities: plans for identifying potential candidates, sorting, guiding, training, and placement, with an emphasis on serving people harmed by the Covid-19 pandemic and members of the aforementioned under-represented groups. The IIA will provide two types of grants. For a requested budget of up to NIS 1 million, the Innovation Authority's participation in the financing will be through a grant at a rate of 50%, 60% or 70% of the approved budget. In the case of a requested budget of up to NIS 15 million, the IIA will offer grants at the rate of 30%, 40% or 50% of the approved budget. In special cases in which the degree of innovation and novelty is deemed exceptionally high, the IIA will be able to grant up to 70% of the funding as a grant.