OPT socio economic report (January 2011) – UNSCO

 SOCIO-ECONOMIC REPORT JANUARY 2011

Since 1996 UNSCO has continually monitored and reported on socio-economic conditions in the occupied Palestinian territory (oPt) and, in the process, established an extensive socio-economic database. UNSCO does not produce primary data but rather makes use of available data, that in oPt are relatively abundant. The information that is available, however, often remains dispersed and is not automatically shared between institutions. The objective of the database is to collate a wide range of social and economic indicators in one location, and, through the report, present a broad perspective on socio-economic conditions in oPt.

The purpose of the present report is to: 1) broaden the access to the information contained in the database through publication of the most recent data gathered; and 2) provide readers with up-to-date information on socio-economic conditions in the occupied Palestinian territory.

The report is divided into six sections, as follows:

Section I. consists of a one-page fact sheet that provides a snapshot view of the socio-economic situation for the current and previous reporting periods.

Sections II. and III. report on the macro-economic and fiscal situation, and sections IV. and V. give an overview of developments in the banking and private sectors, respectively. Section VI is dedicated to issues on Gaza.

Two annexes provide detailed reference information. Annex A presents detailed statistical reference tables, and Annex B lists the main socio-economic terms used in this report along with their corresponding definitions.

Topics of current interest are analyzed in-depth in periodic “Supplements”.

Most sections provide data on the six preceding reporting periods for each indicator and, for comparison purposes, data for a reference period immediately before the Al-Aqsa intifada, which started in September 2000, or the closest time period available.

Note: The data for the West Bank and oPt in this report do not include occupied East Jerusalem unless otherwise specified.

I. SOCIO-ECONOMIC FACT SHEET – JANUARY 2011 Government

Sources: PCBS: production, prices, labor market; MoF: public sector; PMA: banking sector; MoNE: new company registrations; Engineering Offices and Consulting Firms: area licensed for new construction; MoNE and General Petroleum Corporation: Gaza truck movement; UNSCO: closure and Gaza truck movement

a/ Data not available.

b/ Preliminary data.

c/ Includes data for occupied East Jerusalem.

d/ MoNE data for August 2000 do not include aggregates or aid flows.

Sanitation Infrastructure in Educational Establishments in the West Bank and the Gaza Strip

The infrastructure available in educational establishments for disposing of wastewater shows marked differences between the Gaza Strip and the West Bank. In particular, connectivity to the wastewater network is more prevalent in the Gaza Strip (77%), with the notable exception of the Khan Yunis governorate (11%), than in the West Bank (32%). On the other hand, more than half of educational establishments in the West Bank (52%) use porous cesspools as a disposal method, as compared to only a fifth (19%) in the Gaza Strip.

A porous cesspool is a hole dug in the ground that is loosely lined on the inside. Wastewater flows into the pit, and the liquids filter through the gaps in the lining and are absorbed into the earth.

This type of cesspool is useful when a connection to a wastewater network is not available, but it presents serious environmental and sanitary concerns. A major problem with it is that the liquids that leach in the ground are tainted, and eventually the soil around the cesspool becomes polluted. In addition, the untreated wastewater can infiltrate any nearby groundwater supply and contaminate it, seriously affecting the quality of the underground water and even making it unfit for human consumption. The use of porous cesspools is, therefore, especially dangerous in communities where neighbors depend on wells for their water.

These findings confirm the urgent need for rehabilitation and expansion of the drainage and wastewater network in oPt.

Educational Establishments by Wastewater Disposal Method, 2010

II. MACRO-ECONOMIC SITUATION

II.a Production

Percent Change in Real Quarterly GDP  

Source: PCBS. Note: Base year is 2004. Comparable data prior to Q2/2004 are not available from PCBS.

Real GDP shrank in Q3/2010, brining to an end a period of continuous expansion that lasted for 6 quarters. The rate of change, which exhibits considerable volatility over time, was -0.6% in Q3/2010, and -1.3% in (non-annualized) per capita terms. The contraction was experienced in the West Bank, where real GDP was 3.5% lower in Q3 than in Q2. The Gaza Strip, on the other hand, witnessed an 8.0% rise in real quarterly GDP. Still, GDP in Gaza is relatively small and contributes only around a fourth of total GDP.

Compared to the second quarter, economic expansion in Q3/2010 was greatest in the construction sector (14.3%), and the sharpest decline was observed in agriculture (22.8%). The main economic activities in oPt continue to be services (21.6% of total GDP) and public administration and defense (14.5% of total GDP).

II.b Prices

Consumer Price Index (2004 = 100)

Source: PCBS.

The Consumer Price Index (CPI), used to measure inflation, reflects a small increase (0.1%) in prices in January 2011 compared to the previous month, but an inflation rate of 2.9% in the year since January 2010. Year-on-year inflation was highest in East Jerusalem (4.4%), followed by the West Bank (3.5%). Two sectors experienced an overall decline in prices in January: food and soft drinks, and miscellaneous goods and services. During this month the greatest rises were in the transportation and housing sectors.

Change in Consumer Price Index by Major Expenditure Groups

January 2011

Source: PCBS.

The CPI fell slightly in the West Bank, led by a decrease in the cost of food and soft drinks. The price of transportation and housing saw the biggest increases in this region.

In the Gaza Strip the CPI increased slightly, pushed by a rise in the price of restaurants and cafes. The most significant decline in prices in Gaza during the month was in miscellaneous goods and services.

In East Jerusalem the CPI rose, pushed primarily by an almost 5% rise in cost of transportation. The price of food and soft drinks saw the biggest decline, followed by the cost of medical care and communications.

II.c Exchange rates

Both the NIS and the JOD fell against the euro in January 2011. The NIS rose against the US dollar, while the JOD’s exchange rate to the US dollar is constant at 0.71.

Average Monthly Exchange Rates

II.d Labor market

Labor force participation increased in Q4/2010 in both the West Bank and the Gaza Strip.

Labor force participation rate (%)

(Labor force in thousands)

The service sector continues to be the biggest employer in oPt. Compared to the year 2000, the labor market seems to show a structural change away from construction and manufacturing and significant growth in the service sector.

In Q4/2010, average daily net wages rose for workers in all areas, most notably for those who work in Israel and settlements. They showed a modest increase in Gaza, where average daily wages remain only about 70% of wages in the West Bank.

The unemployment rate measures the unutilized labor supply and gives a broad indicator of the labor market situation and of the general performance of the economy as a whole. In oPt, unemployment remains high at 23.4%, with the rate in Gaza about double the rate in the West Bank. Similarly, (data from Q3/2010 reveal that) the youth rate (15 to 24 years) is about twice the adult rate (25 years and over).

Source: PCBS, Labor Force Survey.

Note: The data by age group are for Q3/2010, when overall employment was 26.6%. Data for Q4/2010 are not available from PCBS.

Sub-national level data show great disparities among governorates. Whereas the labor force is only about 14,000 in the Jericho governorate, it surpasses 100,000 in Hebron and Gaza City. Similarly, unemployment rates range from 10% in Tubas to 51% in Khan Yunis. Unemployment in all Gaza governorates is higher than in any West Bank governorate. Gaza City has the lowest unemployment rate in the Gaza Strip (31%), while the highest unemployment rate in the West Bank is found in Hebron (22%).

A similar situation is observed with regards to wages. The lowest average wages are found in Gaza, with a low average of around NIS55 a day in Khan Yunis and a high of NIS71 in Rafah. In the West Bank, average daily wages range from around NIS75 in Jericho to NIS145 in Jerusalem.

Source: PCBS, Labor Force Survey.

Note: The boundaries and the names shown and the designations used on the map do not imply official endorsement or acceptance by the UN.

Q4/2010 saw a decrease in the unemployment rate, most notably in the West Bank. In both the West Bank and the Gaza Strip, the level of unemployment remains more than 2.5 times higher than it was in Q2/2000. (See Table A2. in Annex A for further details.)

Rate of Unemployment and Adjusted Unemployment^a 

Source: PCBS, Labor Force Surveys.

^aAdjusted unemployment includes those who are unemployed and those too discouraged to look for work (see detailed definition in Annex B).

III. PUBLIC SECTOR