Money (illustration)
Money (illustration)

A new Israeli initiative is attempting to convince international banks to set up research & development centers in Israel by having the country pay part of the employees’ salaries.

In an interview he gave to Bloomberg on Monday, Finance Ministry Director General Haim Shani said that Israel’s government will pay as much as 50 percent of the workers’ wages at the banks’ R&D units for up to five years. The amount of payment by the government will vary depending on whether the center is based in the central part of Israel or in the periphery, as well as on the level of salary.

The reason for the initiative, explained Shani, is that “We want to attract large financial services companies, particularly big banks. It will make part of their competitive advantage in the years to come.”

Shani is currently conducting meetings with officials at US financial companies. Several months ago he conducted meetings in the UK.

The economic news out of Israel has been positive despite hard economic times for many other countries during the recent recession. This past May, Israel was accepted into the Organization for Economic Cooperation and Development (OECD) and it was also recently announced that Jerusalem was chosen as the venue for the annual OECD conference in October. Tourism ministers from the 31 countries in the OECD will attend the meeting which will be attended by President Shimon Peres, Prime Minister Binyamin Netanyahu and Bank of Israel Governor Stanley Fischer.

Israel has also historically invested in research. In 2008, for example, the country spent 4.9 percent of its GDP on R&D.

Israel, being the greatest per capita producer of technology in the world, wants to capitalize on this industry. The country is already home to R&D centers for companies such as Intel, IBM, Motorola, Cisco and Hewlett-Packard. Approximately 35,000 Israelis are employed in R&D. Technology exports from Israel rose an annualized 68 percent in the first 11 months in 2009.

According to a recent forecast by Israel’s Finance Ministry, the country’s economy will grow by 3.6 percent this year, according to a June 6 Finance Ministry forecast, and by 3.8 percent next year.

Shani’s initiative is, in fact, about much more than just bringing more R&D to Israel. He also hopes that if his proposed program is successful, it will result in more new immigrants being lured to the country and reverse brain drain.. "We know there are people who would like to return or make aliyah," he said. "It's part of a larger strategy of bringing minds back to Israel."