The Economic Impact of Conflict on the Israeli and Palestinian Workforce

Posted on January 11, 2007

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 Source: If Americans Knew

The Israeli unemployment rate is 9%, while the Palestinian unemployment rate is estimated at 40%.

Chart showing that Palestinian unemployment is much higher than the Israeli rate.

“[A] recent World Bank study predicts that, if the current situation continues throughout 2006, this may be the worst year in the Palestinian economic history. The average Palestinian’s personal income will fall by 40%, and 67% of the population will fall into poverty.”

A. David Craig, World Bank

Source: The source of the Israeli unemployment number is the CIA World Factbook on Israel. In its September 2006 report, “West Bank and Gaza Update,” the World Bank Group projected that Palestinian unemployment would be 40% for 2006, based on March 2006 projections..

Although unemployment in Israel is higher than it was before the Palestinian uprising began, most economists blame the global slowdown, particularly in the high-tech sector for the increase. (According to Business Week, Israel has the most high-tech-dependent economy in the world.) The sharp rise in Palestinian unemployment, on the other hand, is universally viewed as resulting from Israeli policies of closure and movement restrictions.

In addition, since March 2006, Israel has refused to hand over the tax revenue it collects from Palestinians on behalf of the Palestinian Authority, the international donor community has partially terminated its budget support, and banks have refused to engage in financial transactions with the PA due to threats of sanctions from the United States. This sudden sharp decline in funds has prevented government workers from receiving their salaries for months – as of October 2006, the PA owed its employees over $500 million in back wages.

According to the World Bank, “The vast majority of PA employees and their families are enduring considerable financial hardship that is impacting their ability to pay basic expenses, such as rent or electricity bills… [In addition, s]tocks of essential drugs and medical disposables have been depleted in public hospitals and primary health care centers.

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