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30 May 2002
ILO calls for urgent measures to ease "dire"
economic and social crisis in occupied territories

Thursday 30 May 2002

( ILO/02/24 )

GENEVA (ILO News) - Citing what it called a "socio-economic meltdown" in the Israeli-occupied territories, the International Labour Office (ILO) today called on Israel to ease restrictions on the movement of Palestinian workers and urged the international community to support emergency measures aimed at creating jobs and promoting social dialogue between Israelis and Palestinians.

In a new report * to be presented by Director-General Juan Somavia to the 90th Session of the annual International Labour Conference on June 3-20, the ILO documents the "socio-economic meltdown in the occupied territories resulting from the present stage of the conflict and the deep humanitarian crisis which Palestinian families are living through."

The report also cites "the very negative impact on the Israeli economy" and reflects "the sense of insecurity in Israel."

The report is based on the findings of an ILO mission to the occupied territories of the West Bank, Gaza and the Golan on 27 April-6 May and to Syria Arab Republic and Cairo - including a meeting with the Governing Body of the Arab Labour Organization - which was carried out at a time when "dialogue between the two sides was virtually non-existent."

In addition to calling for an easing of border closures, the report cites two major policy measures for immediate consideration - increased technical assistance to the occupied territories and the promotion of social dialogue to ease tensions.

The report said immediate measures and responses are needed as well as an enhanced medium-term programme of technical cooperation.

"A gradual lifting of the (border) closures would go a long way toward alleviating the dire situation of Palestinian workers and families," the report said. "Likewise, measures to resume employment of Palestinian workers in Israel would serve to reduce the dramatically-high level of unemployment. Both these measures would greatly ease the present crisis and facilitate the resumption of political discussions on a peaceful settlement of the conflict."

Regarding technical assistance, the Director-General calls for an enlarged programme of technical cooperation, creating a Palestinian Employment and Social Fund and providing assistance to the Palestinian National Authority and local authorities as well as trade unions and employers to help ease unemployment, protect workers rights and promote social protection and social dialogue.

Noting the donor community's readiness to "pursue its humanitarian effort to alleviate immediate hardship and start reconstructing damaged infrastructure", Mr. Somavia said the international community and those countries with greater influence "need to reassess the means of action so we can respond to what all families in the region want: parents at work, children at school, security in the streets and peace in the community. This continues to be the innermost aspiration of the large majority of Palestinians and Israelis. The world must help them to get there."

Pledging full ILO support for social dialogue between Israelis and Palestinians, Mr. Somavia said the report "must be read with a sense of empathy and compassion for all concerned," adding that "this is not a conventional policy prescription in times of strife, but I am deeply convinced that it is necessary today."

"Any resolution of the conflict must be based on dialogue where the voice of workers in the occupied Arab territories and their families get a fair hearing in order to assist them in their hope of achieving conditions of decent work," Mr. Somavia said. "At the same time, the voices of workers in Israel must be heard and listened to. No one can be satisfied with the present situation or, worse still, a further escalation of conflict."

A "widespread humanitarian crisis"

ILO investigators reported that Israeli border closures and check points between the occupied territories and Israel and neighbouring countries had drastically affected the economy of the region. Real wages for Palestinian workers in Israel dropped by nearly 46 per cent in 2001 compared to the preceding year while the revenue of the Palestinian Authority plummeted by more than 70 per cent.

"The escalation of violence and the military occupation of the territories have caused great physical damage to the infrastructure and agricultural land," the report said. Preliminary figures put the cost of reconstruction of public and private buildings and infrastructure in the West Bank alone at some USD 432 million.

Real growth of the Gross Domestic Product (GDP) of the Palestinian areas declined by 12 per cent in 2001 and real Gross National Income (GNI) - the sum of GDP and of factor income earned aboard (wages of Palestinian workers earned in Israel) - dropped by 18.7 per cent, according to the report.

It noted that more than 90 per cent of the Palestinian population depends on some form of income from work in the occupied territories. "Any fall in employment and/or in income from work, immediately translates into reduced consumption and welfare," the report said. Preliminary ILO estimates suggest that "unemployment could have reached nearly 43 per cent in the occupied territories during the first quarter (January-March) of 2002."

The percentage of the population living in poverty (less than USD 2.1 per day) increased from 21 per cent in 1999 to 33 per cent in 2000 and 46 per cent in 2001. The figure could possibly reach 62 per cent in 2002, the report said.

Israel had not escaped the upheaval, according to the report. Economic activity in Israel suffered a severe contraction during 2001 with GDP declining by 0.5 per cent during 2001 after an increase of 6.4 per cent in 2000.

The Israeli economy has been seriously affected by three economic shocks: the slowdown in the world economy in the second half of 2000, the worsening of the security situation in relation to the Intifada outbreak of September 2000, and the aftermath of the attacks of 11 September.

"High-tech industries have been most affected by declining activity in the US economy, followed by a 50 per cent drop in tourist arrivals in 2001 as a result of Sept. 11 and the worsening internal security situation," the report said. "Construction sector activity has been severely disorganized by the sudden withdrawal of some 55,000 Palestinian workers, as well as falling domestic demand and public investment. These cumulative shocks have spread to the entire economy..."

Unemployment in Israel rose continuously throughout 2001, from 8.1 per cent in the first quarter to 10.5 in the last quarter - equivalent to 267,000 persons. "Some 30,000 reservists have been called into active duty in the first quarter of 2002, with possible adverse effects on business activities," the report said. This situation has led to a downgrading of Israel's rating outlook by the international agency Standard and Poor's on 11 April 2002 from "stable" to "negative."

The ILO report concluded that "Palestinian and Israeli populations are paying a very high price for occupation and violence. The economic and social situation in the occupied territories is deteriorating daily with rising levels of poverty and unemployment which has become in practice a widespread humanitarian crisis."

Mr. Somavia said the present situation cannot continue. Noting the words of the ILO Constitution that "poverty anywhere constitutes a danger to prosperity everywhere," the report declared that "security in Israel cannot be separated from security for the Palestinian population living in the occupied territories."

* * * * *

* Report of the Director-General: Appendix. Report on the situation of workers of the occupied Arab Territories, International Labour Conference, 90th Session, June 2002, International Labour Office, Geneva. ISBN 92-2-112426-6. Price: 12.50 Swiss Francs.

Updated by CL. Approved by KMK. Last update: 30 May 2002.

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