While Israel's defense sector races to integrate artificial intelligence into military systems, a troubling divide is emerging in the country's labor market: experienced workers are becoming more productive with AI tools, while young professionals and entry-level employees face unprecedented displacement.
A new study from the Taub Center reveals that artificial intelligence is fundamentally reshaping who loses their job in Israel, concentrating unemployment among workers in occupations that once offered stable careers and strong demand. The shift marks a departure from earlier automation patterns and raises urgent questions about whether public policy can keep pace with technological disruption.
The Changing Face of Unemployment
Between 2019 and 2022, workers in occupations at high risk of displacement by AI accounted for 14% to 16% of all Israeli unemployed. By 2025, their share had risen to 20% to 25%—a significant concentration that researchers attribute directly to AI's expanding capabilities.
The impact is most acute in tech-dependent fields. Among software developers, AI accounts for between 12% and 20% of the increase in unemployment recorded between 2022 and 2024-2025. Among sales representatives, the effect ranges from 10% to 26% of the increase. Overall, AI explains between 2% and 6% of the change in occupational distribution of the unemployed across the economy.
Young Workers Bear the Heaviest Burden
Research cited in the study points to a stark generational divide. Evidence from the United States shows a 13% decline in employment among young workers aged 22 to 25 in occupations at risk of automation, while more experienced workers were largely unaffected.
Prof. Gil Epstein, one of the study's authors, described the shift bluntly: "The era of hi-tech workers' immunity is over. Our data shows that AI is ripping the cards. It explains about a fifth of the increase in programmer unemployment and locks the door mainly on young people. While veteran staffers become more efficient with the help of the machine, the 'juniors' are the first to pay the price."
The researchers found that AI enables experienced and highly skilled workers to become significantly more productive, potentially shifting demand away from those at the beginning of their careers. This creates a structural problem: junior employees cannot compete with AI-augmented senior staff, even as overall unemployment remains limited.
Robots Add to the Pressure
While generative AI's impact is more immediate, traditional robotics continue to displace workers at a slower pace. Michael Debowy, a Taub Center researcher pursuing his doctorate at Ben-Gurion University of the Negev in Beersheba, noted that robots push people into unemployment more slowly than generative AI because of high implementation costs. However, their cumulative effect remains significant.
In Israel's traditional local manufacturing sector, robots have displaced roughly a third of workers in recent years. Public service has reacted more slowly to automation, Debowy said, because it depends on political decisions rather than market forces—a lag that may provide temporary protection but raises questions about long-term sustainability.
Policy Gaps Widen
Prof. Avi Weiss emphasized the urgency of institutional response: "We see here a process in which technology is not only replacing working hands but is completely changing the rules of the game. The meaning for the unemployed is that competition for existing jobs is becoming much tougher, and those who don't adapt their skills to the AI era may find themselves pushed out."
Weiss called for immediate government action: "At the policy level, the state must already activate assistance systems for the newly unemployed and design programs for them to provide them with skills complementary to artificial intelligence to enable them to reintegrate into the changing labor market."
The researchers identified structural factors shaping the trend, including the slowdown in the hi-tech sector, the growing share of digital-age occupations at risk of automation among both the employed and the unemployed, and the partial regression from structural changes brought about by the COVID-19 crisis.
Why This Matters:
This study reveals a critical gap between technological disruption and public policy response. While Israel's defense establishment accelerates AI integration—with companies like Tenna Systems raising $13.5 million in February 2026 to develop AI-powered defense systems—the domestic labor market shows that AI's benefits are concentrating among experienced workers while younger employees face systematic displacement. The research demonstrates that this is not a temporary adjustment but a structural shift in how labor markets function. Without proactive government intervention to retrain workers and support those displaced from previously stable occupations, inequality and intergenerational economic opportunity gaps will likely widen. The Taub Center's call for immediate activation of assistance systems and skills development programs reflects a center-left concern: technological progress must be accompanied by democratic oversight and public investment to ensure broad-based opportunity, not just concentrated gains for those already positioned at the top of the labor hierarchy.