ILO Report: The two-year war in Gaza: Impacts on employment and livelihoods in the West Bank

27 October 2025

Key points:

• Welcoming the ceasefire announcement, it is evident that after two years of conflict, the war in Gaza has left behind deep economic scars and lasting labour market disruptions across both the Gaza Strip and the West Bank.
• Between Q1 2023 and Q1 2025, real GDP in the State of Palestine fell by 29.0 per cent, driven by a 17.1 per cent contraction in the West Bank and an 87.4 per cent collapse in the Gaza Strip.
• While GDP in the West Bank rose by 9.9 per cent in Q1 2025 compared to Q1 2024, driven by partial recovery across most sectors except transport and construction, it remains significantly below 2023 levels.
• Beyond its macroeconomic impact, the crisis has also negatively impacted standards of living. Real per capita income in the West Bank dropped by 20.6 per cent in Q1 2025 compared to the same quarter in 2023, although it did register a slight uptick of 7.6 per cent relative to Q1 2024.
• The labour market in the West Bank remains in a dire state, with unemployment reaching 31.7 per cent for men and 33.7 per cent for women in early 2025.
• Beyond job losses, the crisis has also led to a reduction in working hours, with average weekly working hours declining by 5.3 per cent, from 43.7 in early 2023 to 41.5 in the first quarter of 2025.
• Over the same period, average daily wages also fell, from 168.0 new Israeli shekels (NIS) in Q1 2023 to NIS147.0 in Q1 2025, largely due to a drop in earnings in Israel.
• Despite a somewhat positive economic outlook in Q1 2025, the overall prospects for the entire year of 2025 remain bleak due to a worsening situation in the West Bank beginning in Q2 2025. This decline is primarily driven by the Shekel liquidity crisis and has been further exacerbated since the June 2025 IsraelIran war, which prompted the intensification of restrictive measures in the West Bank.
• Amid these deteriorating conditions, the Palestinian Central Bureau of Statistics (PCBS) projects a 3.8 per cent decline in West Bank real GDP in 2025 compared to 2024. The decline is expected to be driven by the construction sector, followed by manufacturing and agriculture, while the services sector is projected to expand again.
• The model also predicts the labour force participation rate in the West Bank to decline by 1.5 percentage points for men and by 1.9 percentage points for women in 2025, compared to 2024.
• At the same time, the unemployment rate is projected to rise by 4.4 percentage points for men and 7.4 percentage points for women in 2025. As a result, the overall unemployment rate in the West Bank is expected to reach 38.5 per cent, with approximately 363,491 individuals unemployed that year.
• With employment also projected to decline, each worker is expected to support more non-working individuals in 2025 (4.3 vs. 3.9 in 2024), increasing pressure on households and the economy.
• Clearly, the two-year conflict has devastated not only the Gaza Strip but also the West Bank’s economy and livelihoods. Tackling this crisis requires urgent, coordinated action, including ending occupation measures, supporting businesses and workers, pursuing structural reforms for economic resilience, and fostering inclusive, participatory recovery led by the Palestinian Authority with essential external support.