The End of the Startup Nation?
The Soviet Union, formally known as the Union of Soviet Socialist Republics (USSR), was a country composed of 15 units known as republics. Among these republics was Russia, which was the largest, most populous, and most dominant of the union. The Soviet Union collapsed in December 1991 due to chronic economic stagnation, crippling military spending, the unintended consequences of radical political reforms, and resurgent ethnic nationalism that splintered its constituent republics.
Jews were allowed to emigrate because the collapse of the Soviet Union in 1991 removed strict state exit controls, and Mikhail Gorbachev’s earlier reforms had already dismantled the legal barriers to leaving. The Soviet Union previously barred all citizens from leaving and punished emigration requests. The collapse of the communist government ended these restrictions. There was a strong impetus to leave former Soviet Union countries due to a number of factors including poverty and hyperinflation, the transition to a market economy caused severe financial ruin, joblessness, and a shortage of basic goods. Crime rates spiked, and political instability created deep fear about the future. As a result, many families migrated to secure stable lives, jobs, and futures for their children elsewhere.
Russian Jews moved primarily to Israel after the Soviet Union collapsed because Israel offered automatic citizenship and financial aid, while the United States and other Western nations tightened their refugee rules. Israel also offered non Jews automatic access, residency, and citizenship to those who could prove they had at least one Jewish grandparent. This led to approximately 400,000 non-Jewish ex-Soviets immigrating to Israel out of the approximately one million arrivals.
The huge, unprecedented wave of immigration from the former Soviet Union in the 1990s instantly more than tripled Israel’s pool of available scientists and engineers, providing a massive labor-supply shock that laid the groundwork for the country’s transformation into a “Startup Nation”.
The sudden influx of about 82,000 Soviet-trained engineers, mathematicians, scientists, and technical specialists overwhelmed the local supply of roughly 30,000 native professionals. The small Israeli market could not immediately absorb this volume. Many highly trained Soviet engineers initially faced underemployment, working blue-collar jobs, security guarding, service jobs, or driving taxis because of credential recognition hurdles and a saturated local economy.
As the Israeli economy adjusted to the unexpected supply of trained information technology professionals and global demand for software and hardware soared through the late 1990s and 2000s, these immigrant engineers flooded research and development labs. Their technical prowess accelerated the expansion of Israel’s telecommunications, electronics, defense, and software programming sectors. Russian-speaking engineers became a core pillar of the workforce, helping drive the high-tech sector that now powers a major share of Israel’s modern economy.
This unexpected shock and oversupply of engineers, computer scientists, physicians, mathematicians, and other inputs to hi-tech business was a one-off bonus unlikely to ever be repeated. Currently, Israel is dependent on its own tertiary education institutions for the growing demand for employees in hi-tech. The ex-Soviet workers are aging out, retiring, and are being replaced by new workers.
Israeli high schools currently graduate about 18,000 students each year with the highest level of mathematics. Some of these are the students who will go on to medical, scientific, computer science, engineering, and other technology-oriented careers. Around 58,000 Israeli students study engineering, computer science, mathematics, and statistics at any given time. Computer science is one of the single most popular undergraduate courses of study in Israeli universities and academic colleges. Israel produces approximately 7,500 computer science and tech-adjacent graduates per year from its higher education institutions.
Israel faces a huge shortage of 30,871 teachers ahead of the 2026-27 school year, which began on September 1, according to the Central Bureau of Statistics. Many teachers are also not suitably qualified for the subjects they teach. In 2016, 14,283 teaching staff were employed without full training or suitable certification. Teachers, mainly in the secular stream, are discouraged from speaking out about or holding liberal democratic views. In 2024, the Ministry of Education spent an average of 26% more on a state-religious high school student than it did on a student in a state-Hebrew secular one. The gap stems, among other things, from ongoing structural discrimination, in which state-religious education receives additional earmarked budgets (enhancing Jewish studies, prayer hours, rabbi hours, etc.) – which have no equivalent in state education, and from a policy that allows the opening of more and more small schools in state-religious education based on internal ideological distinctions and gender segregation.
In the 2025–2026 school year, about 37% of Israeli first graders enrolled in state-secular Jewish schools, 40.5% in religious Jewish schools of which 24% were Haredi and 16.5% were national-religious, and roughly 22% in Arab and minority sector schools. The proportion of secular to religious is projected to continue to fall over the coming years due to both differential sector birth rates and increased secular emigration. According to demographic models and projections from Israel’s Central Bureau of Statistics, Haredi (ultra-Orthodox) births are projected to reach 50% of all Israeli Jewish births in the next 30 years. This could change if there are radical changes to how Israel treats Haredi society, specifically concerning finances and conscription. Approximately half of all Israeli children are receiving a third-world education today. They belong in the fastest-growing sectors of the country due to their far higher birth rates. Once they become half the adults and eventually a majority of the adults, they won’t be able to support or participate in a first-world, technology-driven economy if the current policies continue.
Israeli student performance in science and mathematics has faced a steep decline in recent international assessments. In recent international grading, in mathematics, Israel dropped 6 places internationally to rank 43rd out of 44 countries, with average scores falling by 32 points. In science, Israel fell eight places internationally to rank 44th overall. In reading Israel dropped seven places to rank 37th. One in five (20%) Israeli students now falls below basic proficiency thresholds in math and science, up from one in eight (12.5%) in 2019. Haredi students were excluded from the testing, their inclusion would have led to substantially worse scores and rankings across the board. Only 4% of students reached the highest tested level in mathematics, or about 4,000 of the 100,000 who earn high school matriculation certificates (bagrut), every year.
Israeli teachers lag significantly behind their OECD peers in literacy, numeracy, and problem-solving skills across every level of the education system, according to a new study released recently. The study, released in August 2026 by Dr. Yael Melzer of the Shoresh Institution for Socioeconomic Research, analyzed data from the OECD’s Program for the International Assessment of Adult Competencies (PIAAC). It ranked Israeli educators 17th out of 20 developed countries.
10% of the workforce is classified as high-tech, but that’s misleading because not everyone in high-tech is in a high-tech occupation. Some are drivers, some are cooks, some are secretaries. The real number in high-tech occupations in high-tech is 6% or about 265,000 employees. That 6% is responsible for 58% of all Israeli exports. High-tech is directly responsible for 18.5% of Israel’s GDP.
The high-tech sector is dependent on suitably qualified, high-quality, new entrants to continue the successes of the past. Mathematics is key for success in the high-tech sector. Classic software engineering literature (dating back to Sackman, Erikson, and Grant) suggests that top programmers are up to 10 times more productive and innovative than average ones. Furthermore, there is the oft-quoted software ratio of 1:10:100 of developers who are outstanding, competent, and just passable. Applying that ratio to Israel’s high-tech world we have just 1% or 2,650 people who are the outstanding drivers, technical leaders, innovators and performers in the Israeli high-tech world,
There are multiple factors that could lead to the end of Israel’s high-tech miracle. In no particular order, these are: a lack of suitably qualified candidates graduating from high schools due to the drop in quality of schooling, retiring Soviet immigrants who will not be replaced, growing demographic rise of Haredim who do not receive STEM education, and emigration of secular elites especially those with in-demand high-tech experience. The quality of mathematics and scientific education will continue to drop as long as there is a shortage of suitably qualified teachers and the emigration of elites continues. This is obviously reversible, but shows no signs of any efforts being made to correct the long-term trends.
Even more critical, is who teaches the physicians, the mathematicians, the computer scientists, the engineers and so on? That’s the senior faculty in the research universities in Israel, about 400 in each computer science, physics, and mathematics departments, or a total of about 1,200 people.
In Israel, depending on how and who you count, there are about 10 million people. We hear a lot about emigration lately with about a quarter million emigrating in the last year. One does not need a million or two to emigrate to cause a contraction in the economy or a failure of the system. There are basically three groups that keep Israel productive, innovative, and a leading member of the high-tech world: high-tech workers, physicians, and academic staff. Those make up about 300,000 people. If a few tens of thousands of those people decide that it is no longer worthwhile living in Israel, that it is a lost cause due to security, political, lifestyle, economic, or other reasons, then their departure will cause a spiral of collapse, with many others making for the exit.
While one cannot state with certainty that such a departure has started, nonetheless the current data from those who have emigrated over the last three years shows signs of such an emigration. Once such an emigration starts, it is difficult if not impossible to halt, let alone reverse. The coming elections may change the government, but there is little hope that even a new government will be able to change the demographic, security, economic, cultural, and lifestyle factors that prompt those who can to leave for greener pastures.
When one considers the emigration of secular elites, the aging out of Soviet trained high-tech workers, and the deterioration of the secondary education system one must question if the current high-tech environment is sustainable. Currently, Israel relies on foreign universities and training for more than 50% of new physicians entering the medical field each year. It’s doubtful that the same scale can or will be achieved in the high-tech field. This leads me back to the title of this essay: Is this the end of the high-tech nation?
