Palestine Economic Situation Part II

The potential of the economy is still constrained by restrictions on the movement of people and goods. The World Bank report of June 2, 2020 to the Ad Hoc Liaison Committee (AHLC) advocates developing a digital economy to bridge this gap and create quality jobs. The digital economy can overcome geographic barriers, promote economic growth and create better job opportunities for Palestinians. At a time when other countries are considering deploying 5G, the Palestinian Territories were among the last places in the Middle East to introduce 3G in the West Bank and 2G in Gaza. Operators are at a competitive disadvantage as they face restrictions on access to frequencies, locations for network coverage and the import of certain telecommunications equipment.

Due to the Covid-19 pandemic, the number of employees decreased by 12% in the 2nd quarter of 2020 compared to the 1st quarter of 2020 (West Bank 10%, Gaza Strip 17%). Workers in restaurants, hotels, retail and the construction sector were most affected. The number of unpaid family members rose from 39,000 to 133,000 during this period. The number of people employed in Israel decreased by approximately 22% from approximately 120,000 in the 1st quarter of 2020 to 94,000 in the 2nd quarter of 2020. The number of people employed in Israeli settlements decreased by approximately 38% from 21,000 in the 1st quarter 2020 to 13,000 in the 2nd quarter of 2020. The employment rate fell from 43% in Q1 2020 to 39% in Q2 2020 (in the West Bank from 46% to 41% and in the Gaza Strip from 39% to 35%). As a result, the unemployment rate of the standards revised according to the 19th Conference of Labor Statisticians (ICLS) of the International Labor Organization (ILO) only increased by 2% from 25.0% in the 1st quarter of 2020 to 26.6% in the 2nd quarter of 2020 (men 23%, women 41%, Gaza Strip from 45.5% in Q1 2020 to 49.0% in Q2 2020, West Bank from 14.2% in Q1 2020 to 14.8%). 39% of employees were underemployed.

In the 3rd quarter of 2020, the number of people employed rose by 46,000 from 890,000 in the 2nd quarter to 936,000 in the 3rd quarter of 2020. 13% of the employees were still absent from work due to the Covid-19 pandemic. The number of people employed in Israel and the Israeli settlements increased by 30,000 from the 2nd to the 3rd quarter of 2020. The activity rate increased to 41% (in the West Bank from 41% to 45%, in the Gaza Strip it remained at 35%, for men from 61% in the 2nd quarter to 67% in the 3rd quarter of 2020, for women it remained at 15%). The unemployment rate is 18.7% in the West Bank, 48.6% in the Gaza Strip, 28.5% in the whole of Palestine, 25% for men and 44% for women.

According to PARADISDACHAT, most affected by unemployment were young people between the ages of 20 and 24 (46.6% were unemployed here, 79.3% of women in this age group and 74.1% of those in this age group in the Gaza Strip) and women with 13 or more years of education (here 50.0% were unemployed).

The median value of the daily wage in the third quarter of 2020 for employees in the West Bank was 107.7 NIS (equivalent to € 26.96), in the Gaza Strip at 38.5 NIS (equivalent to € 9.64) and in Israel and the Israeli settlements at 250.0 NIS (equivalent to € 62.59).

On January 1, 2013, the law on the minimum wage in Palestine came into force, setting it at 1,450 NIS (approx. 363 €) per month. However, the PCBS found that in Q3 2020, 27% of all Palestinians working in the private sector (6% in the West Bank and 84% in the Gaza Strip) received less.

In the third quarter of 2020, 1.9% of all Palestinian children between the ages of 10 and 17 were employed (2.8% in the West Bank and 0.7% in the Gaza Strip), but many not at work because of the current situation.

The World Bank considers measures in three areas to be absolutely necessary in order to achieve sustainable growth again: 1. Imports and exports to the West Bank and the Gaza Strip and also between the West Bank and the Gaza Strip must be guaranteed. 2. The two parts of the country must come together under a Palestinian consensus government. 3. The international community must provide additional financial support to enable further reforms and economic reconstruction in the Gaza Strip.

Growth in the private sector is critical. However, this improvement continues to be hampered by the restrictions on the movement of people and goods, particularly in the Palestinian C area, the cordoning off of the areas from the outside world, the hindrance of exports and imports, the destruction of the Palestinian infrastructure and the taking over of Palestinian land for the -) Construction of Israeli settlements. According to the UN, the number of obstacles and checkpoints within the West Bank was 705 in July 2018 (checkpoints with permanent and temporary staff and unmanned obstacles such as earthworks, embankments, barriers, road blockades and ditches). There were also numerous “Flying Checkpoints”.

An October 2013 World Bank report estimated that if Palestinian businesses and farms were allowed to develop in Area C, the revenue of the Palestinian Authority would increase by $ 800 million and the Palestinian gross domestic product by 35%. This could cut the budget deficit by half and reduce unemployment and poverty. The decisive factor here would be the lifting of the many Israeli restrictions. The World Bank’s country manager for the West Bank and Gaza Strip, Mariam Sherman, believes that Palestinian access to Area C would be a major step towards solving the economic problems in Palestine. “The alternative is bleak.”

Palestine Economic Situation 2