JERUSALEM (AP) – When Israel came under blockade last spring, the owner of a pub in Jerusalem, Leon Schwartz, moved quickly to save his business – he switched to a supply and import model that kept him afloat over the summer. Then came the second lock.
After restaurants and shops closed again, Schwartz’s business struggled to survive. He has laid off 16 of his 17 employees.
In contrast, Israeli software maker Bizzabo, which operates in the heavily affected conference management sector, quickly rediscovered itself last spring, offering “virtual events.”
Such boom and failure stories reflect Israel’s growing “digital divide.”
Even before the pandemic, Israel had one of the biggest income gaps and poverty levels among developed economies, with several high-income incomes, especially in the lucrative high-tech sector, while many Israelis barely manage as civil servants in the industry. services or as small business owners.
These gaps widened as the country’s second nationwide blockade last month dealt a new blow to an economy that was already hit hard by the first round of restrictions.
The aftermath of the pandemic also deepened long-simmering divisions among Israeli Jews, pitting a predominantly secular majority against a powerful ultra-Orthodox minority.
Prime Minister Benjamin Netanyahu, who has been the subject of months of mass protests over his alleged mishandling of the pandemic, is seen as benefiting his ultra-Orthodox partners at the expense of the greater good. Trying to control the latest outbreaks, Netanyahu chose economically devastating blanket blocking instead of targeted restrictions on the hotspots of the infection, including many ultra-Orthodox communities, presumably to avoid upsetting his allies.
The deep rift in Israel’s social structure has sparked a warning from Israeli President Thebes Rivlin.
“I feel like the air is full of gunpowder. “I’m furious in the streets,” Rivlin told parliament this week. “The tribe of Israel is breaking through the cracks and the accusing fingers are pointing from one part of society to another, one tribe to another.”
Netanyahu initially won applause for tackling the virus crisis after he quickly sealed the border and imposed a lock that appears to have led to control of the outbreak.
But the lock-up came at a high cost, leading to nearly 35% unemployment in April, as hundreds of thousands were either laid off or fired, mostly in low-paid jobs such as retail, travel and hospitality.
Although most jobs have gradually returned with the opening of the economy, the volume of cases has risen sharply in the autumn, forcing the government to announce a second, open lock last month. According to official figures, more than 967,000 people, or almost a quarter of the workforce, are out of work again.
Schwartz, who owns two bars and a craft beer company, Biratenu, manages to sneak out of his mail order business until the restaurants reopen in the summer. But safety regulations limit the number of customers it can serve, reducing sales.
Schwartz fired a third of his staff and cut his salary. The government then announced its second blockade. Now he and his lone employee are again focused on delivery.
“It looks like a garage,” he said. He estimates that business is declining by at least 60% from pre-pandemic levels.
Alon Alroy, co-founder of Bizzabo, faced a similar existential crisis in early March when he realized that the conference management business was on the verge of drying up. In what he described as “the hardest month we’ve ever had,” he released a quarter of his workforce as his team tried to come up with a new strategy.
By the end of the month, they decided to focus on “virtual events.” The key, he said, was to go beyond standard Zoom calls and create an engagement environment.
The software allows participants in large online gatherings to network or break away for private meetings, just as they would at an old-fashioned business conference.
“Everyone knew that the event industry could disappear unless we somehow invented the event technology space,” he said, speaking from New York.
After recording the two strongest quarters, Bizzabo hired its redundant workers and attracted an additional 40 people on board. It now employs about 150 people in offices in Israel and New York.
While some Israeli high-tech companies have been hit by the economic downturn, the industry as a whole is experiencing perhaps its strongest year.
According to the NGO Start-Up Nation Central, Israeli companies are having difficulty attracting investors. “Israeli technology companies have raised $ 7.24 billion this year, up 30 percent from the same period last year,” said Uri Gabay, the group’s co-general manager.
John Medved, founder and CEO of Israeli venture capital firm OurCrowd, said the strong Israeli technology scene, unlike the rest of the economy, reflects a global trend.
“It’s just more emphasized,” he said. “What we’ve noticed is happening all over the world is that there is indeed a very strong impact of the virus from a two-tier economy.”
Medved said Israel is well positioned, given the many companies focused on sectors that thrived during the crisis. These include digital healthcare and telemedicine, artificial intelligence, cybersecurity and technology for banks and online merchants. Israel’s newly established ties with the United Arab Emirates have led to a new source of money-rich investors.
But as Israel’s technology scene flourishes, many others are abandoned, creating divisions that provoke angry protests.
For more than three months, thousands of Israelis have been holding weekly demonstrations calling for Netanyahu to resign, mainly because of his management of the economy. Many of the protesters are people who have lost their jobs or businesses.
Much public anger has also been directed at ultra-Orthodox leaders whose communities have violated public safety rules, sent coronavirus levels into the sky and loudly opposed calls for targeted blockades. Critics accuse Netanyahu of caressing his political allies to help him defend himself while facing corruption charges.
Israeli economist Dan Ben-David, founder of the Shoresh Institute and a professor at Tel Aviv University, has been warning about the units for years, saying they are rooted in the country’s education system.
He said schools in remote rural areas, Arab communities and the ultra-Orthodox sector have long been neglected, leaving students ill-prepared for the modern world.
“About half of the children in Israel today are educated for the Third World,” he said.
In the case of the ultra-Orthodox, the neglect is intentional – religious leaders use their political factor to fund an education system that encourages scripture study on topics such as mathematics and English.
“We are the only nation in the entire developed world that allows parents to deprive their children of a basic curriculum,” he said. “The fact that we have been allowing it for decades makes us complicit in all this.”