ISRAEL'S BIGGEST PROBLEM: BRAIN DRAIN

Shrinking High-Tech Sector Could Lead to a Brain Drain

By Relly Sa'ar
Haaretz


Tel Aviv-----August 12, 2002...... Comverse is to begin its third big round of lay offs in a year, today. Some 600 people, one-fifth of the company's workforce in Israel, are to receive redundancy letters and join their colleagues who were sent home in two previous rounds of lay offs - a year ago and seven months ago.

"The company has a regular drill for mass lay offs - a team of paramedics is brought in to deal with employees who faint and the doors to the top floor of the building are locked so that the desperados can't get to the roof," says R.A., who works for Comverse at one of its offices in Ramat Hahayal.

Yesterday the company sent home a vanguard of 30 employees. "The atmosphere in the building was gloomy." said R.A. "Six hundred redundancies is a lot, especially when the company is cutting deep and sending home even senior employees who have been with the firm for 11 years."

In the current round of lay offs, the company is wiping out entire divisions, whose products are not expected to have any future. But that isn't the end of it; Comverse is planning a global restructuring and will amalgamate headquarters leading to dozens more job losses in Israel.

Comverse isn't the only company downsizing its workforce. ECI Telecom is axing 220 jobs this week, having already dismissed 1,500 employees in the last 18 months and last month Amdocs made 900 employees redundant following a fall in profits.

There are no exact figures on the number of redundancies in the sector, but manpower company managers estimate that up to 16,000 of the country's 80,000 high-tech workers have lost their jobs. Around half of them appear on the statistics of the Employment Service.

A glance at the Employment Service's statistics since February this year shows that the number of unemployed high-tech workers registered with the service is steady at around 7,500-8,500 a month. The number of new job seekers in the sector is also steady at around 800-850 a month. The figures illustrate the difficulty of finding employment in the shrinking high-tech sector.

Anat Padan, director-general of Manpower Information Technology (MIT), a human resources company and subsidiary of Manpower Israel, says one of the ways to measure demand for employees in the high-tech sector is to look through the wanted ads section. According to data collected by MIT in June this year, 2,680 wanted ads were published in the press, a 61-percent drop on last June's figure of 6,800 ads.

Managers of high-tech companies have suffered the most from the lay offs. The reason being that the higher the position of the person made redundant, the lower his or her chances are of finding a new job. According to MIT, the number of wanted ads for managerial positions has dropped 88 percent compared to last year, while ads for technical support personnel, for example, fell by "only" 63 percent.

However, it would appear the fall in demand for employees has began to bottom out. "In the first six months of the year there was a moderate increase in the number of wanted ads in the high-tech sector, compared to the same period last year. Most companies have already completed their restructuring and cut their workforce. The market is beginning to act according to actual demand, and in the second quarter of the year there was a 4-percent increase in demand for high-tech workers," says Padan.

The lay offs at Comverse and other high-tech companies are providing work for placement agencies. "Despite the redundancies, the high-tech sector always needs employees. MIT has customers, such as the cellular companies, that will take in some of the employees downsized from Comverse and there is a demand for professionals such as experienced C++ programmers for whom we can find a job relatively quickly and the same goes for people with experience in telecommunications."

Not all of those laid off from the high-tech sector will find new jobs in Israel. Some of them will find their way to agencies such as Computers, People and Software to find a job overseas. CPS director-general Orit Naor says every month she gets dozens of request from unemployed high-tech personnel to find them a job overseas because they have despaired of finding a job in Israel.

Naor expresses regret that decision makers are doing nothing to stop the brain drain. "The Trade and Industry Ministry could have invested in high-tech companies to prevent them from laying off employees. In two years' time, when the crisis is over, we will be left empty-handed because hundreds of our top professionals will have found employment overseas and won't want to come back to Israel."

Naor gives an example to illustrate her claims: "A week ago I found a job in New Zealand for a 35-year-old hardware engineer, a graduate of the Technion Institute with seven years experience, who was unemployed for 18 months after losing his job with a startup. In the last six months he received four job offers - two in the United States, one in Ireland and one in New Zealand, so he had plenty to chose from."