IN 2008


December 2009


Population and Labour Force

The refugee population in the Gaza Strip is estimated at 980,400 in 2008, representing 67.9 percent of the total population (1,443,882)1. Of these, 201,000 refugees were economically active, including 103,800 who were employed (51.7 percent) and 97,200 who were unemployed (48.3 percent), according to the relaxed definition of employment.

Relative to the previous year, the number of economically active people in Gaza grew 3.6 percent in 2008 while for refugees such growth was slightly higher, at 3.7 percent.

Employment and Unemployment

Labour force results for 2008 reflected the first full-year effect of the heightened siege on Gaza that began in mid-2007. This period, leading up to the most destructive military operation in Gaza’s history, witnessed dramatic increases in unemployment in a territory where rates of joblessness were already amongst the very highest in the world. Both refugees and non-refugees were affected, with the latter hardest hit. Indeed, during 2008 non- refugees were more likely to be out of work than their refugee counterparts, reversing the results of the 2007 labour force surveys.

Overall, the adjusted broad unemployment rate2 in Gaza rose to 49 percent from about 38 percent in 2007, with the refugee rate growing from 38.8 percent to 48.3 percent and the non-refugee rate increasing from 36.4 percent to 50.2 percent. The core (ILO) unemployment rate in the Middle East and North Africa region in 2006 was about 12 percent, the highest of any region in the world. This compares to a core unemployment rate of about 40.6 percent in Gaza in 2008.

In Gaza, population growth averaged 3.8 percent per year between 1997 and 2007. At the same time, the labour force participation rate averaged 36.4 percent during 2000- 2008, while core unemployment averaged 32.3 percent during the same period. To maintain such an unemployment rate through the year 2015, the Gaza job market would have to create and sustain an average of 13,300 jobs each year throughout that period. To reduce core unemployment to the Middle East and North Africa average of about 12 percent would require the creation of an average of more than 76,000 additional and sustainable jobs each year by 2015.

To put this into perspective, in Gaza in 2008, the number of employed persons actually decreased by 27,0003 (a drop of 14.7 percent), whilst the number of unemployed increased by about 37,800 relative to 2007 (a 33.7 percent increase). There were 14,740 fewer employed refugees relative to 2007 (a 12.4 percent decline) and 22,000 more unemployed refugees (a 29.2 percent increase). Meanwhile, the number of employed non-refugees fell by 12,200 (a 19 percent drop) and the number of unemployed non-refugees increased by 15,800 (up 42.7 percent).

All net employment losses in 2008—27,000 positions—were in the private sector, and non-refugees were disproportionately affected. That sector lost 23.2 percent of its employment base relative to 2007, with every branch shedding employment during 2008, an outcome unmatched since 2001, the first full year of the second intifada and a period of severe dislocations. The public sector, on the other hand, added an average of 4,000 positions, with refugees benefiting almost exclusively. Public sector hiring, various job creation programmes and the tunnel economy were unable to compensate for private sector job deterioration.

This quantitative leap in unemployment was accounted for by the Israeli-imposed siege of Gaza and, in particular, the effects of the siege on private businesses. Agriculture, manufacturing and construction accounted for about 70 percent of the decline in private sector employment—the economic branches most susceptible to the siege- induced shortages of fuels, raw materials and other inputs, as well as the inability to export final goods. These results reflected the first full-year effect of the heightened siege on Gaza that began in mid-2007.

Social Composition of Employment

Unlike the experience of the past few years, when informal types of employment (e.g. self-employment and unpaid family labour) generally expanded as the economy deteriorated, the labour market in 2008 shed informal types of employment far more rapidly. Thus the declines in the numbers of unpaid family labour (37.2 percent) and self-employment (23.4 percent) in Gaza were far sharper than the decline in the number of wage-employees (4.3 percent) and employers (3.5 percent). This suggests that crisis facing Gaza has reached a level of severity in which even informal low-paying types of employment are no longer sustainable. With about half the economically active population unemployed, the implication is that a very large segment of the Gaza population requires humanitarian assistance to survive.

Although women’s labour force participation rates remained far below regional and international averages, the number of economically active women in Gaza grew rapidly in 2008—three times faster than the labour market as a whole. There were 48,600 economically active women in Gaza in 2008—about 15.8 percent of the labour force—and an increase of 4,600 or 10.4 percent relative to 2007. Refugee women accounted for a disproportionate amount of this growth. Substantial labour force growth by women was associated with a 10.1 percent decline in employment and a massive 44.5 percent increase in the number of unemployed women in 2008 relative to 2007. UNRWA, the public sector and NGOs remained a key source of employment for women, including temporary job creation programmes, as did agriculture (largely as unpaid family labour). Employment gains for women—an estimated 2,350 jobs— were concentrated in private services (which includes UNRWA and NGOs) while employment losses—and estimated 5,125 jobs—were overwhelmingly in agriculture.

Some 77 percent of women’s job losses were among non-refugees, while 70 percent of the increase in the number of unemployed female job seekers was among refugee women.

A major change in women’s employment profile in 2008 was a very rapid increase in the number of employers and self-employed among them as well as significant growth in wage-employment. Men, on the other hand, had net declines in each of these categories. The number of women employed as unpaid family labour fell sharply, accompanied by a sharp decline of female employment in agriculture.

Youth (15 – 24) continued to suffer the highest rates of unemployment of any age cohort. They accounted for around 28 percent of the labour force but 40 percent of all unemployed persons. In total, there were 85,900 youth participants in the labour force in 2008, of whom 54,600 or 63.5 percent were unemployed. The youth labour force grew by less than 2 percent, much slower than that of women and below the regional average. The number of employed youth fell by 17.2 percent in 2008, while the number of unemployed youth increased by a similar margin.


Labour market deterioration, falling wage rates and accelerating inflation combined to produce an 11 percent decline in the purchasing power of the average monthly wage in Gaza in 2008. The average nominal monthly wage was about NIS 1,504 (USD 418 at average NIS/USD exchange rate of 3.6). At the macro level, employment losses (including unpaid absentees) and consumer inflation resulted in a nearly 25 percent drop off in the purchasing power of wage incomes in the Gaza Strip with dire implications for living levels and poverty in 2008.

Looking Ahead

Labour market conditions in Gaza in 2008 were arguably the worst in its history. The intensified Israeli siege on the territory choked off economic activity, especially in the private sector. The rise of unemployment and the drop in real wages were sharp and dramatic and reflect a full­year’s impact of the Israeli siege of Gaza. The rapid increase in women’s labour force participation is also indicative of the degree to which households are exerting efforts to stem the decline in household incomes.

Perhaps the worst year in economic terms in Gaza’s history ended with the most destructive military assault ever experienced in the territory. The ensuing death and destruction has broadened and deepened the economic and labour market crises by destroying physical productive capacity of businesses and farms, including farmland and livestock. This displaced employment and has delayed the recovery of the affected enterprises over the short and medium terms.

As the severity of the Israeli siege has increased, the acquisition of imported inputs and the export of outputs remain severely constrained and the high levels of private sector unemployment documented in this briefing paper are likely to persist. The situation is made worse to the extent that it dissuades local businesses from maintaining investment levels.

The significant destruction of public infrastructure—including government buildings, schools, clinics, roads, bridges, electricity, water and sewer lines— constrains the delivery of essential public services. In addition to the hardships imposed on those in need of health and social services, a degraded infrastructure negatively affects the private sector by shifting costs of the enabling environment to private enterprises, rather than the public sector. To the extent that the public sector is not able to provide infrastructure, services and a healthy and well-educated workforce, private businesses, in order to remain viable and competitive, will have to absorb some or all of these costs. This in turn, reduces the rate of economic growth and development and, other things being equal, slows the absorption of labour in both the public and private sectors in the short and medium terms.

In the context of rapid population and labour force growth, the short and medium-term outlook is for persistently high unemployment and poverty, despite relatively high levels of external assistance. Indeed, higher levels of social safety net assistance in Gaza in recent years have not reduced the extent of household poverty. Private sector employment, which has deteriorated at an accelerated rate in the past year, cannot be seriously addressed in the context of a political and economic siege of Gaza. Likewise, the ability of the public sector to absorb labour will likely remain constrained due to the lack of fiscal resources and the constraints imposed on the Hamas administration in Gaza. Job creation programmes and the tunnel economy have been unable to provide sufficient jobs to counter the decline in private sector employment. One cannot expect such irregular employment to be sustainable in the longer term.

The isolation and destruction imposed on Gaza by the GOI does not bode well for private sector activity and, therefore, for the development and growth of sustainable private employment. Unless Gaza is allowed to develop normal economic activity, unemployment, falling wages and deeper poverty will remain serious problems. Easing restrictions to allow for normal economic activity, on the other hand, will go much further than humanitarian assistance in relieving the hardship.


1 According to the results of the 2007 census, as per the PCBS press release of 15 February 2009.

2 The ‘adjusted broad unemployment rate’ includes an estimate of private sector employees who were ‘absent from usual work’ and did not receive their salaries. In normal conditions, such employees would be considered as employed, on the basis that they were in receipt of salaries. UNRWA estimates that this was not the case for an estimated 50 percent of absent workers in Gaza during 2007 – 2008; as such, they have been added to the ranks of the unemployed.

3 Figures reflect the adjusted broad rates of employment and unemployment.