Israel's Economy Faces Dual Reality: Thriving Tech Sector, Struggling Ordinary Citizens

Israel's economy presents a stark dichotomy, with its robust high-tech sector continuing to perform strongly, even as the everyday livelihoods of many Israelis suffer the sustained impact of the ongoing conflict.

The sector driving the nation's headline economic figures employs approximately one in nine Israeli workers. This segment, which earns a substantial portion of its revenue from international clients, has largely maintained its operations and profitability despite regional instability. These companies typically pay wages close to three times the average across the broader economy.

However, the remaining eight out of nine Israeli workers are employed in sectors heavily reliant on the domestic market, such as retail, agriculture, and small businesses. These local enterprises and their employees have been disproportionately affected by the war, as disruptions and security concerns lead to reduced local spending and operational challenges.

More than two years after the conflict began in October 2023, nearly half of Israel's self-employed individuals report earning less than they did prior to the war, according to a survey by the Israel Democracy Institute. The strain on these businesses rarely appears as a large-scale economic collapse but rather as a persistent erosion of income.

Adi Degani, a former kite surfing instructor and small business owner, exemplifies the personal cost of the conflict. After serving over 400 days as a reservist, he returned to find his business in debt. He took out a bank loan to remain solvent and has since shifted to working in construction, illustrating the difficult adjustments many ordinary Israelis are forced to make to navigate the economic fallout of the war.

The situation highlights Israel's challenge of addressing the domestic economic consequences of the war without waiting for a complete cessation of hostilities.