Artificial intelligence is rapidly being adopted by businesses, a first-of-its-kind study in Israel by the Israel Democracy Institute (IDI) and the Central Bureau of Statistics (CBS) revealed.
It found that 28% of businesses used AI in the past six months, and 32% of employees work in companies that use AI. This puts Israel on par with leading European countries in AI adoption.
However, the survey also highlighted a significant “digital divide” within the Israeli economy. Knowledge-intensive industries, particularly hi-tech, are embracing AI at nearly three times the rate of traditional sectors like manufacturing, trade, and construction.
This disparity, also observed in international comparisons with countries like Germany, raises concerns that AI could further widen the gap between different industries in Israel.
AI is seen as a foundational technology, similar to electricity or the Internet, with the potential to transform the economy and job market. It can either complement human labor, freeing employees for more complex tasks, or substitute workers, potentially leading to technological unemployment.
The survey, which gathered insights from senior managers, offers initial data on AI’s impact on employment:
Sixty percent of businesses using AI reported that AI now performs tasks previously done by humans. Almost half of these (44%) involve “routine and technical tasks,” but a notable 16% involve “tasks that require thinking.”
Nine percent of businesses using AI reported an impact on their workforce size. About 5% reduced new hires, while others directly cut existing staff.
While these figures are lower than some predictions of widespread job replacement, they indicate that AI is already changing the nature of work. The IDI suggested that, currently, AI seems to be complementing rather than replacing employees at a faster rate, shifting how tasks are allocated within businesses more than reducing the overall workforce.
Looking ahead, 27% of businesses plan to use AI in the next six months, with larger businesses showing increased future adoption. A significant barrier for non-adopting businesses is a “lack of knowledge about AI capabilities,” especially in traditional industries.
The study said Israel’s innovation policy should not only focus on developing new AI technologies in hi-tech but also on implementing existing AI across the broader economy. It also stressed the need for major labor market policy reforms, including expanded employee training and lifelong learning initiatives, to prepare the workforce for these rapid changes.
Crucially, policy efforts must consider the differing adoption rates to ensure AI-driven economic growth is inclusive and benefits all populations, preventing any group from being left behind.