Only 9% of the Israeli employees work in high-tech industries while the remaining 90% work in industries with low income such as fields of hospitality and administration. This causes a gap between the old and new economies and to forge a unified society, there is need to reduce the gap as stated the Bank of Israel Karnit Flug.
The wage picture shows that most poorly paid employees work in industries in which labor productivity is low too which corresponds to data that shows that labor productivity in Israel is low as compared to other developed countries and therefore there is low productivity in domestic industries that are not exposed to international competition.
This occurrence results in a “dual economy” which is evidenced by the social gaps. In Israel the wage gaps are highest among advanced economies and they represent an inequality in skills.
Solutions to brige the social gaps.
According to Karnit Flug, the solution to bridging this gap lies in a number of steps that include; improving education and training programs so that they provide skills that allow integration in the labor market, increasing competition by removing export barriers, encouraging investment in advanced technologies by traditional industries that sell to domestic markets and have an idea about competition from abroad, expanding and encouraging innovation all over the economy through support from the office of the Chief Scientist, by easing regulations so as to accommodate new ideas and by improving physical infrastructure.