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Source: United Nations Special Coordinator for the Middle East Peace Process (UNSCO)
30 November 2007


The labour market occasional report is produced and published once every quarter and is intended as a complementary report to the monthly UNSCO socio-economic update reports. The report will provide data on the last six quarters for a number of indicators as well as base-line data. Some very limited analysis will be provided with each table. The source for all of the data used in this report is the PCBS quarterly labour force

For further information please contact: Ramallah: Bushra Mukbil; Gaza Strip: Raed Raqeb

During the third quarter of 2007, the population growth rate remained relatively steady at 3.3 percent. In absolute numbers this means that the oPt population has grown by nearly 130,000 people in the last 12 months. The labour force participation rate increased slightly during the third
quarter of 2007 primarily as a result of a relatively fast growing labour force in Gaza. According to the ILO definition (i.e. not including discouraged workers) the labour force participation rate stands at 42.7 percent. Interestingly, the number of discouraged workers (i.e. persons of working age that do not work and are not seeking work) has dropped which means that people who in the past had given up trying to find work are now again entering the labour market as economic conditions continue to worsen.

In the third quarter of 2007 the unemployment rate (ILO definition) increased quite dramatically to 23.2 percent (an increase of 4 percentage points if compared to 19.2 percent in Q2-2007). At first glance it would seem that this increase is primarily due to developments in Gaza where official unemployment levels have reached 32.9 percent (a six point increase over Q2-2007). In fact, unemployment has increased almost as dramatically in the West Bank where the number of unemployed increased by 17.6 percent (compared to an increase in the number of unemployed of 15.6 percent in the Gaza Strip).

While an increase in unemployment figures was to be expected for the Gaza Strip, given the strictly imposed siege following the Hamas takeover in June 2007, it would appear that the third quarter employment figures do not yet fully reflect the impact of the siege. According to the PCBS data the total number of Gazans with either full or partial employment dropped by only 13,200 while other sources such as Paltrade have estimated that some 30,000 jobs have been lost due to the ban on exports and limitations on imports of raw materials. One possible explanation of this difference could be that Gazans that have been temporarily laid off (while the siege lasts) are still reporting their status as being employed. As the siege continues, steadily increasing unemployment is to be expected.

In exploring the labour market disaggregated by gender, we note that the third quarter of 2007 has been especially bad for female employment. This is particularly true in the West Bank where female participation in the labour market is declining while female unemployment is growing almost twice as fast as male unemployment levels. A typical seasonal jump in female employment levels is expected for the fourth quarter (harvest season).

An interesting finding is that the economic hardship and the ongoing siege do not affect the relative role of Gazan females in the labour market. Female labour force participation rates for Gaza are the same today as they were prior to the Intifada.

In the third quarter of 2007, the female labour force participation rate for the whole of the oPt decreased to 15.7 percent with 3 out of 4 women in the labour market actually being employed.

In exploring the labour market disaggregated by status of employment we note that the decline in employment is relatively evenly divided over the various employment status groups with one exception. The number of West Bank Palestinians that report to be employers is increasing.

While we observe some improvement in the relative importance of waged work both in Gaza and the West Bank, the overall trend remains that waged work is slowly being replaced by self-employment and unpaid family labour. For the whole of the oPt, the relative importance of wage-work has declined from 68 to 59 percent.

With overall employment levels declining and public sector labour frozen at 165,000 jobs, the relative importance of the public sector, particularly as a source of waged work, is once again increasing and is expected to further increase during the fourth quarter of 2007. As such, the public
sector remains a very important source of employment for the Palestinian economy.

Disaggregating employment figures by economic activity shows some very distinctive patterns. Employment in the agricultural sector for instance is clearly subject to strong seasonal effects with the large increase observed during Q2-2007 being almost evenly matched by an equal drop in Q3-

However, of some concern is the asymmetry between economic development in the West Bank if compared to the Gaza Strip. While in the West Bank we observe a continuation of the growing importance of the manufacturing and construction sectors we observe that this trend has been
halted in the Gaza Strip where employment in those two sectors is actually decreasing.

While in the West Bank, over 5600 new jobs were created in the manufacturing and construction sector these sectors experienced a contraction of well over 11,000 jobs in the Gaza Strip. Moreover, as noted above, it is likely that the Gaza figures underestimate the reality of employment in these two particular sectors in the Gaza Strip.

While domestic employment in the West Bank is declining, the figures for the third quarter of 2007 suggest that Palestinian employment in Israel, Israeli settlements and Industrial estates is actually increasing. In relative terms, employment in ISI’s has halved if compared to pre-Intifada figures.

During the third quarter of 2007 the relative importance of public sector employment has grown back to their 2006 levels as employment in the public sector has remained stable while private sector employment is decreasing.

As such, the public sector remains a critically important employer with one in every three domestic jobs being in the public sector.

While nominal daily wages (NIS) have slightly increased during the third quarter of 2007, real daily wage (in US$) and therefore purchasing power has declined further.

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