Danger to the economy: The failure that will cost the state tens of billions

Dori Cohen, 25, recently lost his job as a software tester at a high-tech company. Three months earlier, his father, Avraham, who served as an administrative operations manager at another high-tech company, was also fired. Both of their mornings now look the same: sending out resumes. But that is where the similarity ends. Dori has signed up for several courses in the hope of staying relevant, and he sounds optimistic. Avraham, who is nearing 60, tells a different story: "They paid me 30,000 shekels a month for my high operational capabilities and experience. They replaced me with a junior who earns a third, works with artificial intelligence, and does excellent work. I understand why I was fired, and I understand one more thing: there is no demand for my practice."

Avraham's case is far from a private story. The penetration of artificial intelligence is challenging young workers as well, but for veterans, the adaptation is often much more complex: they are not just required to learn a new tool, but to adopt work patterns, skills, and work habits that are updated at a very high speed. For members of Generation Y and Generation Z, who grew up with a smartphone and social networks, the new tools are a natural continuation of their lifestyle, and they quickly became a routine and taken-for-granted part of their workday.

The 2025 Labor Market Report published a few weeks ago paints a very problematic picture regarding the integration of older people into the Israeli labor market. The forecast for 2030 estimates a rate of approximately 12% unemployment among those aged 50 and over. Artificial intelligence is not only replacing jobs, it is rapidly changing the skill set in every profession. Workers aged 40 to 60 who do not undergo updated training are left with skills that do not match the requirements of the new market. Studies in Israel and around the world show that a worker fired after the age of 50 is exposed to prolonged unemployment and a final exit from the employment cycle. As months pass without work, the chances of placement drop sharply, employers prefer younger and cheaper workers, and temporary unemployment turns into forced retirement.

An examination reveals that the state does offer some training tracks, most of them at an introductory level. At Campus IL, the platform of the National Digital Array, free introductory courses on artificial intelligence are available in Hebrew and in self-paced online learning. The Ministry of Labor operates more focused tracks, including an "AI Systems Implementer" course that trains for the integration of technology in organizations, and the Employment Service runs various training programs from time to time in cooperation with the high-tech industry.

"On paper, it sounds like a serious response, but the numbers reveal the opposite picture," says economist Ram Ben-Avi, an expert on public policy for the third age. "Israel invests only 0.07% of GDP in vocational training, compared to an average of 0.11% in OECD countries." However, this saving is illusory: what the state does not pay for training, it pays dearly elsewhere. According to him, "An older unemployed person costs the state between 80,000 and 100,000 shekels a year in unemployment benefits alone, even before income supplementation, related allowances, and loss of tax revenue. Tens of thousands of older people outside the labor market accumulate over a decade into tens of billions of shekels. And against them? One significant training for an older worker costs 15,000 to 20,000 shekels. Training 50,000 older people will cost one billion shekels, once. Official studies on Ministry of Labor programs found that in most training tracks, there was an increase of 6% or more in income over time. That is, the state knows that the investment pays for itself, and chooses not to invest."

Why don't older workers easily enter subsidized government training? First of all, because the system was not built around them: eligibility for training vouchers is mostly defined around the status of a job seeker, not age, so a 58-year-old worker who sees the ground slipping away will reach the track only after being fired. Even then, training days are counted within the unemployment period, so full training may last beyond the safety net. But the deeper failure is in the definition of the product itself. Government training is built for conversion, to turn a person into a new professional: a welder, an electrician, an accountant. "A worker like Avraham does not need professional conversion but an update of the existing profession: to continue and manage operations, this time using the new tools. But most of the supply is not built this way. AI courses mostly provide a technological skill without a defined employment horizon, while professional training leads to a job, but usually in another profession. Tracks that connect the two, professional updating within the existing field of occupation, are still few compared to the need, and the older worker is the first to fall into this gap," adds Ben-Avi.

And alongside these, an entire private market operates: colleges, digital schools, and independent instructors. An AI course has become a shelf product intended for all layers of the labor market, from students to managers, and the private market prices it in two leagues. In the cheap league, basic courses for beginners, mostly recorded tutorials for self-learning or individual Zoom meetings, for a few hundred shekels up to 1,500 shekels. In the second league, in-depth programs with personal accompaniment, practical projects, and specialization in sought-after niches, at prices that climb from 2,500 shekels for an online course to 15,000 to 20,000 shekels for a comprehensive track.

And how do other countries deal with the challenge? In Singapore, every citizen who crosses the age of 40 receives a training credit of 4,000 Singapore dollars that does not expire, the state subsidizes up to 90% of tuition fees, and those who go to study in the middle of their career receive a living allowance of half their salary, for up to two years. This year, a new benefit was added: half a year of free access to paid AI tools for anyone who registers for a course in the field. Great Britain offers data and artificial intelligence training lasting 16 weeks, for free, with a guaranteed job interview at the end. And the European Union has already enshrined this in law: since 2025, an organization that operates AI systems is required to train its employees to work with them. The State Comptroller, the Bank of Israel, and the Israel Democracy Institute have identified the training of older people as a critical tool for increasing employment and improving productivity. "Many see the issue of core studies as the most significant threat to Israeli education and economy in the coming decades, a threat that will weaken productivity and social cohesion. But this is also a problem that is expected to explode in our faces with no less intensity," concludes Ben-Avi.