High-tech sector increases wages, widens gap

The entry of computers into traditional industry also ended the wage disparities between workers in large factories and those in smaller firms.Israel’s technological advancement has both increased wages in certain sectors, while widening the social economic gap, according to a …

The entry of computers into traditional industry also ended the wage disparities between workers in large factories and those in smaller firms.Israel’s technological advancement has both increased wages in certain sectors, while widening the social economic gap, according to a recent report released by the Bank of Israel.



Idit Solberg, the report’s author, and senior member of the central bank’s research department claim that citizens born before 1945 have not enjoyed the “fruits” of economic growth during the mid 1990s.



Based on her findings, the salaries of the younger generation increased while those of the older population remained stagnant. The study also pointed to correlation between education and wages, with a growing disparity in salaries between university graduates and less-educated citizens.



But even among the educated, the older generation, which was less exposed to the high-tech sector, had lower salaries. As technological advancements entered the work place, and entire industries were created, the older generation could not compete. Not only did demand for technological-savvy workers increase, but the salary that went along with the positions, surged. According to Solberg, salaries of employees who worked throughout the 1990s skyrocketed by 40 percent, especially younger workers in the high-tech sector.



Based on the analysis, the entry of computers into traditional industry also ended the wage disparities between workers in large factories and those in smaller firms. Up until the 1990s, employees of larger factories received increased salaries. Due to production costs, their colleagues in smaller plants were paid less. The phenomenon, according to Solberg, has disappeared in the wake of technological efficiency.