In an economy severely depressed for most of the past decade, developments in the first half of 2011 provided some marginal relief. The Gaza labour market in first-half 2011 was characterized by relatively significant growth in employment and an equally significant decline in unemployment relative to the same period in 2010. Total employment grew by 21 percent in the year-on-year comparison, with about 41,270 more people working, with refugees accounting for about half this growth. While the public sector continued to expand employment—particularly among non-refugees—private sector employment grew by more than 50 percent, accounting for the vast bulk of growth. Construction, commerce and agriculture accounted for more than 70 percent of all new job opportunities in this period.
The broad refugee labour force participation rate continued to decline, albeit at a slower rate, and averaged 37.2 percent while that of non-refugees rose to 46.4 percent in the first half of 2011. Both refugees and non-refugees made employment gains with non-refugee experiencing both more rapid growth and more rapid reductions in unemployment. On the other hand, real wage gains were greater for refugees in this period. The broad refugee unemployment rate fell from 41 percent in first-half 2010 to 33.8 percent in first-half 2011. In the same period broad unemployment for non-refugees declined from 43.7 percent to 31.6 percent.
The main factor in the surge in private employment was expanded activity in the tunnel economy resulting in expanded importation of much needed building materials and other productive inputs. This allowed for the reactivation of long-dormant construction and related activities. While the informal economy provided for wider imports, the blockade continues to restrict exports, which today stand at just over three per cent of pre-blockade levels, preventing sustainable economic growth.
Indicators suggest an acceleration in economic activity in first-half 2011 relative to second-half 2010. Employment gains and declining unemployment were also associated with a partial reversal of the real wage deterioration witnessed in Gaza since 2008. In inflation adjusted terms, the average monthly refugee wage increased by 14.5 percent in first-half 2011 relative to first-half 2010 while that for non-refugees grew only 0.5 percent. Despite significant gains, unemployment in Gaza, as well as poverty, remain among the most severe in the world. Furthermore, the Israeli-imposed blockade continues to impede Gaza exports, without which there can be no sustainable private sector growth and development.
The details on these trends for the Gaza Strip labour force as a whole, and separately for refugees and non-refugees are presented below. Section 1 provides overall findings regarding labour force participation, employment by sector and activity, unemployment and wages in Gaza; Section 2 presents results for refugees and; Section 3 the findings for non-refugees.
The reference period is the first-half of 2011. Sequential changes compare first-half 2011 with second-half 2010 and are subject to seasonal fluctuations. Parallel changes compare first-half 2011 with first-half 2010. The latter comparison largely eliminates seasonal fluctuations in the data.
1. Gaza Labour Market in General
A. Population and Labour Force
The average working-age population (those 15 years of age or older) in the Gaza Strip is estimated to have grown by 2 percent in first-half 2011 relative to second-half 2010.1 The proportion of that population that was employed, actively sought employment or who were willing to work during this interval—i.e. the broad labour force participation rate—declined marginally to 40.25 percent.2 The resulting labour force increased by some 1.9 percent to an estimated 354,155 persons. Employment jumped by more than 47,000 jobs in first-half 2011, or 24.7 percent to an estimated 237,475. The broad unemployment rate declined to 32.9 percent from 45.2 percent in second-half 2010, as the number of unemployed fell 25.7 percent to an estimated 116,675.3
Relative to the first half of 2010, private sector employment grew 31.4 percent, adding some 34,000 jobs. Construction jobs grew by more than 9,400, increasing by 3.5 times or 252.1 percent relative to first-half 2010. This accounted for 27.7 percent of all job growth in the year-on-year period.5 This was followed by commerce, which added some 8,800 positions and accounted for 25.8 percent. There were nearly 6,400 more jobs in agriculture, contributing to 18.7 percent employment gains with transportation and communications adding 5,370 positions and accounting for 15.7 percent of total job growth. Manufacturing employment expanded by more than 3,000, contributing only 8.8 percent of the growth.
The surge in construction employment, in particular, and employment in general, is the result of the increased availability of building materials and other productive inputs relative to 2010. This, in turn, seems mainly to be due to the expanded tunnel trade.6 To some extent, the marginally reduced restrictions on the Israeli side of the Gaza border also contributed to employment growth in this period. The fact that the rate of private employment growth in the sequential period was greater than that in the parallel period suggests acceleration of economic growth.7
D. Wage Rates and Monthly Wages
Nominal and real wage wages rose in the sequential period. The average nominal daily wage rose about 7.4 percent to NIS 63.2 (USD 17.9)8 in first-half 2011 relative to second-half 2010. The average number of work days per month for the employed in Gaza grew slightly to 23.5 days. Higher daily wages and increased work days produced a 7.7 percent increase in the average monthly wage to NIS 1,487 (about USD 42.1). With consumer price inflation of about 0.67 percent cut, the purchasing power of the average monthly wage rose 7 percent in the sequential period.