Israel’s Tech Layoffs: Who Can Afford to Try?

Wix announced in May that it would cut about 1,000 jobs, roughly a fifth of its workforce. In July, monday.com said it would lay off about 620 people, including around 350 in Tel Aviv. Their announcements sharpened a familiar question: when companies restructure, who can afford to risk starting over?

A Times of Israel blog post published Nov. 3, 2026, puts that question at the center of an argument about artificial intelligence, layoffs and the rules governing work. Its author, Heitor Castro, an investor and entrepreneur in São Paulo, writes that AI is reducing some jobs while lowering the cost of starting a company. The outcome, he argues, depends on “the price of trying.”

The cost of leaving

Wix cited AI and the strong shekel, which makes Israeli salaries more expensive in dollars, as reasons for its cuts. In July, monday.com said it was reorganizing around its AI platform. An Israel Innovation Authority survey of tech employers in June 2026 found that software companies laid off workers at a rate of 6.6 percent, compared with 1.1 percent at hardware companies. About 7 percent of companies said AI was the main reason for cuts; half of companies planning layoffs said AI was shaping the decision.

Total tech employment barely moved, the post says, because other companies kept hiring. Castro describes a pattern of AI-accelerated restructuring, with senior engineers and product managers leaving who understand how products were built and what customers still lack. Tools that make some roles redundant, he argues, also allow smaller teams to test ideas that once required larger budgets.

Building software may cost less now. Rent still needs paying. Israel founded about 775 startups in 2025, below the more than 1,400 founded in 2014. Castro writes that most laid-off workers will, and should, take another job, and that a few months of savings won't fund a company requiring heavy computing power. Where a viable idea exists, the choice to try still comes down to who carries the cost.

Since 1963, Israel's Severance Pay Law has required employers to give a dismissed employee roughly one month's salary for each year worked. Castro says much of that money sits in the employee's pension fund under Section 14. It belongs to the worker, but withdrawing it for living expenses may bring tax consequences and reduce future retirement savings. That's a cushion, not free venture capital.

A legal route, with a bill attached

The blog traces the freedom to leave and compete to a 1999 National Labor Court case. Dan Frumer, a security software engineer, had signed a 22-month non-compete with Radguard before joining competitor Check Point. The court refused to enforce the clause. Castro says the principle still applied today is that a restriction on someone's freedom to work isn't enforceable unless an employer shows a legitimate interest, such as a real trade secret. Secrets remain protected, he writes; experience goes with the worker.

Failure has its own terms. Israel's Insolvency and Economic Rehabilitation Law, in force since September 2019, gives individuals a standard payment period of three years after a rehabilitation order. A court can shorten or extend that period before qualifying debts are discharged. Castro writes that a failed company doesn't automatically ruin its founder—and that when it does, a road back exists.

The blog contrasts that framework with Brazil's FGTS, funded by employer deposits of 8 percent of salary each month. When a worker is dismissed without cause, the employer adds a penalty equal to 40 percent of those deposits. Brazilian labor courts generally accept non-competes only when they're limited in time and scope and the employer compensates the former employee for the restriction period. “Whoever wants to stop you from trying pays for it,” Castro writes. “That is exactly the right order.”

Brazil's weak point, in his account, comes after a business collapses: small-business owners are often asked to guarantee loans personally, leaving founders who do so liable long after their companies close. Savings and freedom to compete don't make the risk disappear.

Castro says Israel should keep non-competes narrow, clarify what severance workers can withdraw and at what cost to retirement, and preserve a route back for founders who personally guaranteed loans for failed companies. He also points to a history of workers leaving established companies to build others: eight scientists left Shockley Semiconductor in September 1957 and founded Fairchild Semiconductor with outside backing; in 1968, Robert Noyce and Gordon Moore left Fairchild to start Intel. In 1974, Dov Frohman persuaded Intel to open a five-person design center in Haifa.

That history doesn't turn a severance letter into a startup plan. Castro says a worker should weigh the idea, market and available funding, then ask who pays if the venture fails—and for how long. As companies redraw their workforces around AI, the answer won't be found in the technology alone.