A strong shekel has sharply increased the global cost of employing Israeli engineers, raising concerns across the country’s technology sector about competitiveness, hiring strategies, and long-term growth. In the Globes article “Shlomo Kramer: Shekel makes Israeli engineers world’s most expensive,” published on the Globes financial news website, cybersecurity entrepreneur Shlomo Kramer warns that currency appreciation is distorting Israel’s position in the global talent market.
Kramer, a co-founder of Check Point and CEO of Cato Networks, argues that while Israel’s technology workforce remains highly skilled and innovative, the strengthening of the national currency has pushed wage costs, when measured in dollars, to levels that outpace those of many competing tech hubs. This shift has occurred even as the global technology sector undergoes cost-cutting and increased scrutiny of spending, making Israeli engineers comparatively more expensive for multinational firms and startups operating with international budgets.
The impact is particularly pronounced for companies that generate revenue in dollars but pay salaries in shekels. As the shekel appreciates, payroll expenses rise in real terms for these firms, eroding margins and, in some cases, prompting companies to reconsider where they expand their engineering teams. Kramer suggests that this dynamic could incentivize firms to move hiring to lower-cost markets in Eastern Europe, Asia, or Latin America, where currency conditions and wage expectations are more favorable.
At the same time, Israel’s domestic tech ecosystem continues to face structural challenges beyond currency effects. High demand for experienced engineers, combined with a limited talent pool, has sustained upward pressure on wages. The stronger shekel has amplified this trend, making compensation packages even more expensive when translated into foreign currencies. For early-stage startups, which often rely on foreign investment denominated in dollars, the mismatch between funding currency and operating costs can be particularly acute.
Kramer’s comments reflect broader concerns within Israel’s high-tech sector about maintaining its competitive edge. While the country has long been recognized for producing top-tier engineering talent and fostering a vibrant startup culture, cost competitiveness is increasingly seen as a critical factor in attracting and retaining global business activity. Some executives warn that if current trends persist, Israel could gradually lose ground to other innovation hubs that offer a more balanced combination of talent quality and cost.
Nevertheless, the situation is not without nuance. A strong currency can signal economic resilience and investor confidence, and Israeli tech companies continue to benefit from deep expertise, strong networks, and a track record of successful exits. Data from the Bank of Israel highlights how exchange rate movements reflect broader macroeconomic forces. For many firms, these advantages still outweigh higher labor costs. However, as Kramer indicates, the calculus may be shifting, especially in an environment where companies are under pressure to optimize efficiency.
Policy responses remain uncertain. While exchange rates are influenced by a range of macroeconomic factors beyond direct government control, industry leaders have called for measures to expand the domestic talent pool, improve productivity, and support companies navigating currency volatility. Organizations such as the Israel Innovation Authority have emphasized the importance of sustaining competitiveness through long-term investment. Without such adjustments, the combination of high wages and a strong shekel could increasingly shape decisions about where companies choose to build their engineering capacity.
Kramer’s warning underscores a broader tension within Israel’s technology sector: the very strengths that have fueled its global success—high demand for talent, strong investor interest, and a resilient currency—may also be contributing to rising costs that challenge its competitive position on the world stage.
