Wednesday, January 26, 2022

Israel’s Defense Brain Drain

Public Sector Brain Drain Tap IAI and Rafale It’s not just law offices, accountant firms and advertising agencies that can’t compete with high-tech salaries. Recently, hundreds of security and defense industry engineers have left their government jobs for better working conditions in the private sector. Primary casualties: Israel Aerospace Industries and Rafale Advanced Defense Systems. Asaf Gilead Over the past week, the Rafale staff WhatsApp group was flooded with satirical memes spreading like wildfire. The jokes were about employees stunned to hear the good news about receiving an annual wage increase of at least 0.35%. This was somewhat fake news, as the annual salaries of most engineers and researchers had increased by 4%. But the memes convey the sentiment that the high-tech pay carnival has left Israel’s defense companies unfazed. In contrast, the average salary in Israel’s high-tech sector has grown by 8% over the past year, according to data from the Central Bureau of Statistics.

Just a few weeks ago, employees of Intel Israel, a few kilometers south of Rafale Advanced Defense Systems, received an annual bonus of three months’ salary. In recent months, it appears that Rafale, as well as other state-owned defense companies, has been fighting to stem the influx of resigning workers, one particularly attractive to the civilian market: software engineers. and semiconductor engineer.

brain drain challenge

“Globes” learned that dozens of employees – engineers, technicians, programmers, managers in both the software and hardware sectors – have recently left Rafael for privately held companies in Israel’s north and central region. Their reasons are, among other things, better salaries and higher status. Like law offices, accountant firms and advertising agencies, security and defense companies are also being abandoned in favor of the private high-tech sector. The Israelis have dubbed this trend “Silicon Valley Syndrome”.

Senior executives close to Rafale say the company recruited 1,000 employees this year, some even from large, in-demand high-tech companies, and the company’s annual employee churn rate was no more than 5%. In addition to an annual increment of 4%, employees are entitled to quarterly or annual bonuses amounting to an average of about 20% of their wages, but this depends on performance.

The situation is similar at Yehud-based Israel Aerospace Industries, which develops satellites, aircraft and spacecraft, and its Ashdod-based subsidiary Elta, which develops radar, communications and electronic warfare systems. According to the LinkedIn group for IAI employees, this year saw a 1-6% drop in workforce in state-owned security and defense companies. This phenomenon signals an alarming trend: information and talent from the security and defense industry is leaking from the public sector to the private sector.

Rafale, Alta and IAI, and even the privatization of Elbit Systems, all saw their workforce decline by several percentage points. True, many security and defense industry employees are not allowed to have social network profiles, but that is much to point to a negative trend across the sector. Former employees describe “globs” of state-owned companies locked in old government pay structures that make it difficult to face ever-increasing competition on Israeli high-tech workers in terms of pay, organizational culture, work environment and work. home flexibility. “Instead of a few percentage hikes in Rafale, I increased my pay by 25%,” says an employee who recently left for a company in the North. Most ex-employees of Rafale and IAI told globe He had improved his salary by about 50%.

Another employee says that there has been a problem of brain drain due to leaving. “It will take a long time for a company to replicate the technology that goes with a departing employee, and quite a bit of money. There are areas where, even after a few years, you can’t find a replacement that the engineer went with.” for.”

WFH Challenge

“Globes” has found that some former Rafale employees have risen to positions in high-tech and med-tech companies based in the north: medical device companies General Electric and Philips Tirat Hacarmel, Intel, Apple, and Amazon Migdal in Haifa, Western Digital Tiefen Industrial Zone, Tower Semiconductor and KLA in Hayemek. Former public sector employees have also moved on to competitor Elbit Systems, which, despite being a defense company, is no longer state-owned, and is therefore more flexible in its ability to offer competitive terms.

“Covid-19 opened new horizons for us,” says a former Rafale worker living in the north. Before the pandemic, some Rafale workers were allowed to work from home (WFH), thanks to classified computers provided to them. Meanwhile, others may receive WFH permission, but without the use of applications necessary for their work, such as email.

Today, with a variety of remote work options and a huge increase in the demand for skilled technical personnel, these workers are receiving more offers, at the same time, opening up more options for job seekers. “You can easily find work in the central region, live in the north, work from home and travel to Tel Aviv once or twice a week,” says a former Rafael employee.

Despite the limitations of work from home, Rafale claims that the company laid off or laid off employees during the period of restrictions due to the coronavirus pandemic. “We also invested in providing benefits to workers during that period,” the company says.

pay gap challenge

The difficulty of matching the salaries of the private sector is a burden for any government company. It’s even harder for state-owned security and defense companies, which must compete for coveted technology workers. Rafale, IAI, and Elta, a subsidiary of IAI, all employ some of the country’s best engineers in semiconductor, telecommunications, image processing, algorithmic, and software development. Much of this experience is relevant to other high-tech companies.

Government companies such as Rafale, IAI and Alta have seen an average 8% increase in the average salary of high-tech workers to NIS 25,812 as of last October – an average increase of NIS 1,900 within a year. Meanwhile, the 4% wage hike in Rafale, and the NIS 1,500 promised over two years made to IAI and Elta workers, reflects the condition of companies surrounded by agreements with the government and unions. However, it should be noted that Alta pays a three-year retention grant at NIS 40,000-50,000 per employee.

“It’s an excellent technology school, and interesting for anyone who wants to work in a multidisciplinary environment,” said a former Rafael employee. “But eventually, I saw people with kids and hostages saying ‘I can’t do this anymore.’ People are curious to see what’s happening out there, and they’re attracted to the huge development happening in this area right now. On the other hand, there are social benefits that you don’t always find in every tech company.”

The same employees say that “it’s easy for them [public] Defense companies to recruit graduates, as they are wonderful places to gain experience, but after a year or two they are not able to make a real counter-offer, if one of the high-tech companies is looking for its employees. One of them contacts and makes an attractive offer.”

Response: “We offer challenges and technical diversity”

In response, Rafale said, “The company implemented a 4% pay hike for Rafale engineers, excluding the one-time bonus distributed under an agreement. Further, it should be emphasized that the bonus policy is based on the company’s performance and employee’s performance.” As is performance, as is customary in other enterprises Rafael operates as a business enterprise that administers employee incentive programs based on performance.

“Rafale funds higher education for hundreds of employees per year, and Rafael also funds doctoral studies in Israel and abroad, which is equivalent to an investment of NIS 1 million per year per employee.”

IAI said: “IAI develops and manufactures the most advanced technologies in the world for the safety and security of the State of Israel. The company’s employees enjoy exceptional technological diversity and challenges, and have unprecedented experience in developing groundbreaking systems that are Israel has unique hi-tech industries.

“As government defense companies, we have a number of constraints. With regard to working from home – recently in order to allow remote work similar to other technology companies and to facilitate the flexibility of working remotely A number of improvements have been made. We hope to expand this potential significantly.

“With respect to wages, though we are a government company, compensation mechanism and incentives have been approved to retain the employees of the company to be more competitive. The rate of increment in the company by the management and in coordination with the labor union The rate of wage increase in 2021 was in line with rates in the hi-tech industry.”

Published by Globes, Israel Business News – en.globes.co.il – on January 11, 2022.

© Copyright of Globes Publisher Eatont (1983) Ltd., 2022.

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