Contents

• Preface
• Acronyms
• Introduction
• Chapter One: Employment in the West Bank and the Gaza Strip

1. Geographic and Demographic Characteristics
1.1 Geographic Characteristics
1.2. Demographic Characteristics
1.2.1. Population size and distribution
1.2.2. Age grouping
2. National Accounts
3. Types of businesses/employers
3.1. Concentration and Status of the Economic Establishments
3.2. The Employment Share of the Various Sectors
4. Palestinian Employment Status
4.1. Structure of the Palestinian Labor Force
4.2. Employment According to Region
4.3. Employment According to Sectors
4.4. Employment Conditions
5. Employment in Israel
6. Women Employment
7. Employed Children in the Palestinian Territories
8. The Palestinian Educational System
9. Who are the unemployed?
9.1 Education and Employment
9.2 Employment and Age
10. How do people find jobs?
 
• Chapter Two: External Problems Facing the Palestinian Labor Market Israeli occupation

 
• Chapter Three: Internal Palestinian Impediments

3.1. Cultural and Social Impediments
3.1.1. Overpopulation
3.1.2. Women and traditions
3.1.3. Education, Training and Employment
3.2. The Economic structure of the Palestinian territories
3.3 The Political Impediments
 
• Chapter Four: The Peace Process, Donor Assistance, and the Palestinian Economy

4.1. Recent Trends
4.2. The Aim of Donor Assistance
4.2.1. The Political Agenda
4.2.2. Why the emphasis on economic assistance?
4.2.3. Did the Donor Aid Fulfill the intended objective?
4.2.3.1. The Palestinian Economy
4.2.3.2. The Political Environment: The Impact of Donor Aid on the support for the peace process
4.3. The impact of donor aid on the structure of public sector employment
4.4. Current Initiatives
4.5. Conclusion
 
• Chapter Five: Investment in Education Conclusion and Recommendations

 
• References

Tables and Figures

Chapter One

• Figure 1.1: Population Size of the Palestinian Territories According to Area and District: 197
• Table 1.1: Projected Population and Growth Rate of the West Bank and the Gaza Strip (1993-2003)
• Figure 1.1: Population by Age Groups
• Figure 1.3: Population by Age Group According to Districts
• Table 1.2: GDP and ANP Growth Rates (Percentages)
• Figure 1.4: Contributions of Economic Sectors to the GDP (1994-1996)
• Figure 1.5: Number of Economic Establishments According to Ownership
• Figure 1.6: The Contribution of the GDP by Economic Activity in the Palestinian Territories and Jordan
• Figure 1.7: establishments in the Palestinian Territories and the Persons Engaged in Them
• Figure 1.8: Distribution of the Palestinian labor Force (1998)
• Figure 1.9: The Employment Situation in WBGS by Labor Force Status
• Table 1.3: Comparison between the Labor Force Status in the West Bank and the Gaza Strip
• Figure 1.10: Employment According to Sector
• Table 1.4: Distribution of Palestinian Employment According to Occupation and Place of Work
• Figure 1.11: Gender and labor Force Status
• Figure 1.12: Comparison Between Male and Female Populations outside the Labor Force
• Figure 1.13; Reasons why Females Preferring to Work are not employed
• Figure 1.14: Reasons Given by Women Preferring not to work for their Decision
• Table 1.5: The average number of children and the average age at marriage of women
• Figure 1.15: Gender and Type of employment
• Figure 1.16: Distribution of Students in the West Bank and Gaza According to Gender and School Type
• Table 1.6: Student-Teacher Ratio in Palestinian Schools
• Figure 1.17: Comparison Between Employed and Unemployed persons According to Education
• Figure 1.18: Distribution of the Unemployed According to Age and Gender
• Figure 1.19: Ways of Finding Jobs

Chapter Two

• Figure 2.1: West Bank Map According to the Wye Memorandum
• Figure 2.2: Industrial Employment in Palestine in Comparison with Selected Arab Countries

Chapter Three

• Figure 3.1: Fertility rate According to Region
• Figure 3.2: Fertility Rates in Selected Countries
• Figure 3.3: Comparison of Palestinian Birth Rate and World Rate
• Figure 3.4: Projected Population Growth Rate in the Palestinian Territories
• Figure 3.5: Comparison Between the Population Growth Rate in the Palestinian Territories and other Selected Countries
• Figure 3.6: Illiteracy Rate in the West Bank according to Gender and Age Groups
• Figure 3.7: Gender and Labor Force Status
• Figure 3.8 : Comparison Between Male and Female populations Outside the Labor Force
• Table 3.1: General Development Indicators for the West Bank and the Gaza Strip
• Table 3.2: Comparison between the Infrastructure Services in the WBGS and other countries and regions (1992-94) education system will continue to be much larger than is needed,
• Figure 3.9: Number of Palestinian Students Enrolled in Palestinian Colleges and Universities According to Area of Study

Chapter Four

Figure 4.1: Changes in Employment Rates in the West Bank and Gaza Between September 1995 and December 1998.

Figure 4.2; Changes in Employment According to Sector

Figure 4.3: Comparison Between the Employment Rates in the Palestinian Territories and the Employment in Israel and Settlements

Figure 4.4; Issues Most Important to Palestinians

Table 4.1: International Assistance to the West Bank and Gaza Strip, 1993-1997

Table 4.2: Commitments According to Sector, 1993-1997

Figure 4.5: Palestinian Attitudes Towards Various Issues

Figure 4.6: Palestinian Support for the Peace Process

Figure 4.7: Level of Support for the Peace Process According to Trust of Political Factions

Unemployment and employment have been the major challenges facing the economy and politics in Palestinian society, whether during the direct control of the Israeli occupation, or during the current interim and self-autonomy phase.

Israel has worked deliberately on impeding any chances for job-creation opportunities in the agricultural, industrial and tourism sectors in the West Bank and Gaza Strip. It has also drawn unemployed Palestinians in the West Bank and Gaza towards job opportunities in Israel, thus helping those laborers to earn their bread. This took place at the expense of the Palestinian economic structure and reinforced Palestinian subordination to the Israeli economy.

Currently, the creation of job opportunities is one of the major challenges facing the Palestinian economy towards ending this subordination and building the components of the independent Palestinian entity and the aspired-for state. Further, the success of the Palestinian state's economy is considered a major factor for ensuring stability in the region.

This issue is particularly important because it overlaps with other developmental issues, particularly social issues. Population growth and the level of educational, for example, are issues intertwined with unemployment and economic growth, thus making them crucial and sensitive topics.

The Jerusalem Media and Communication Center (JMCC) is proud to present this study, an important, courageous and timely contribution, in the hopes of adding to the current developmental debate in Palestinian society towards establishing priorities and the most effective policies for achieving the goal of economic and political independence and stability.

Ghassan Khatib, Director
Jerusalem Media and Communication Center JMCC

Employment is essential for stable economies and is necessary for their growth. High employment rate stimulates the economy, increases investments, reduces the burden on the public sector, and increases supply and demand. Higher employment means more taxation, thus better services. The improvement in the supply and demand sides of the economy also generates more employment, thus more investments, and so forth. In general, a healthy employment environment enhances the economic well-being of people and, consequently, reduces the negative social and political ramifications associated with high unemployment. On the social level, increase in employment figures reduces crime rate, improves family relations, etc. On the political level, the higher the employment rate, the more stable is the political system. Better economic conditions are essential for good governance and for democratic development.

Over the past three decades, the employment situation in Palestine was plagued by various problems: internal and external. The external ones were and still are attributable primarily to the Israeli occupation of the West Bank and the Gaza Strip. The internal ones are predominantly a result of social, political, and economic shortcomings that characterize the Palestinian territories and the rest of the Arab world.

The recent developments in the Arab-Israeli peace process has brought hope to the Middle East and hopes for ending the conflict. In this respect, the parties involved in the process focused attention at the economic situation of the Palestinian people and emphasized the need to improve their economic conditions. Hundreds of millions of dollars were pledged to rebuild it and to set the bases for its reconstruction. Significant portion of these pledges was targeted at creating jobs for the Palestinian labor force. Plans for building industrial areas were drawn, private and foreign investments were encouraged and significant number of Palestinians were employed in the newly established Palestinian public institutions.

The efforts of the parties involved were neither without shortcomings nor without setbacks. Most of these difficulties stemmed from the lack of progress on the political front, and the others resulted from measures by the Israelis, the Palestinian Authority and by the international donor community. The economic conditions are deteriorating and the economic hardships are becoming detrimental to the peace process. The inability to properly deal with those challenges is a cause of concern. According to the Director General of the International Labor Organization, Michel Hansenne:

“The risk of social havoc undermining prospects for lasting peace in the region will soon become overwhelming unless jobs are created urgently and on a large scale…This should be a top priority”

Focusing on Israeli policies is essential in understanding the current employment situation and consequently in drawing practical conclusions. This is particularly important in the future efforts to remedy the impact of Israeli policies that restructured the Palestinian labor force from a generally agrarian one to one dependent primarily on cheap employment in Israel.

Assessing the internal factors is equally important. Understanding the needs of the Palestinian economy particularly with regard to the utilization of the country’s resources efficiently should be the bases for any policies targeted at economic growth. This part will be the main focus of the study because abundant literature has been conducted on the impact of the Israeli occupation on the Palestinian economy. Very few indeed examined the internal and domestic factors hindering economic growth, particularly those related to human resources and the labor force.

The researcher will assess whether the objectives envisaged by the international community materialized with respect to alleviating the employment problem were met. The challenges faced in this regard and the reasons for those challenges will be elaborated and discussed.

It is the aim of this researcher that after examining those issues a clearer picture will emerge which will hopefully assist in drawing recommendations that consider the realities of the political situation and the challenges confronting the Palestinian leadership and the Palestinian society.

The study was based primarily on figures and data from the Palestinian Central Bureau of Statistics, from the Palestinian Ministry of Labor, and from other sources such as the World Bank, the European Union, and the United Nations. The researcher also consulted with a number of studies conducted by various Palestinian and foreign scholars and experts who wrote on the subject. In addition, the author relied on specially gathered material by the Jerusalem Media and Communications Center which were believed to be important but not available.

Throughout the course of this research, the researcher was assisted by a number of individuals whose contribution was helpful and whose suggestions added significantly to the study. I am grateful to Mr. Ghassan Al-Khatib for his support and encouragement, to Dr. Adel Zagha for his supervising the manuscript and for his invaluable comments and suggestions, to the Ministry of Labor for providing me with valuable literature and information on the Palestinian labor force, and to Dr. Hasan Abu Libdeh for making the resources of the PCBS available to the researcher.

I am also indebted to my colleagues at JMCC for their help during my research. Gratitude is particularly due to each and every one of them. Finally, special thanks go to my wife Isabelle for her insight and for reviewing the manuscript and checking the consistencies of figures.

As discussed earlier, the problems of Palestinian employment are related to the general problems facing the Palestinian society. On the one hand, the Israeli occupation and the lack of progress in the peace process have been detrimental to the Palestinian economy in general, and the Palestinian labor market in particular. On the other hand, the internal impediments associated with high birth rate and low participation of women in the labor force have had their toll on the structure of the labor force and on the prospects for a stronger and more satisfactory labor market.

Whilst the end of occupation and the establishment of a strong and independent Palestinian state are a prerequisite for the development of the Palestinian economy and the proper and effective utilization of human resources, the future Palestinian state is expected to confront serious challenges whose origin is rooted in the Palestinian political and social traditions. In the view of this researcher, these challenges emanate primarily from the low participation rate in the production market compared to the overall population size. The under representation of women in the labor market, and the high rate of dependent children are alarming and their negative impact on the economy is not to be underestimated.

Obviously, there are many variables that may be discerned as other causes for the current state of affairs and for the prospects in the future. To some, the economic problems of the region as a whole stem for the lack of progress in the political systems and the weak institutional and organizational capacities of the legal structure of the respective countries. Others attribute the declining economic conditions to the hegemonic nature and the imbalance in the relations between developed and developing states, while other observers point their fingers to a combination of these factors.

Although one can not dispute the impact of political instability or deficient institutions or the role the international economic structure has on the economies of such developing societies, such as the Palestinian society, it is unwise to neglect and underestimate the social restrictions that may impede the path towards development. The UN sponsored international conferences and the efforts of various international and local non-governmental organizations attest to the impact of such conditions on the economies of societies.

As a result of high growth rate and due to the lack of significant independent contributions by women, poverty levels increase and the ability to provide public services for the nonproductive segments of society become more difficult. Poverty alleviation and the provision of adequate public services can only materialize in conditions where the state is in a position to levy sufficient taxes from its citizens in a manner appropriate with and relative to the income generated by those citizens. As long as the labor force is economically burdened by the dependence of a large segment of the population on them, as long as poverty will persist and the provision of public services will continue to be defective and meager so will the efforts targeting sustainable economic development.

Addressing these challenges and overcoming the social, political, and economic problems associated with them is a formidable task because of the difficulties in changing the beliefs and persuasions of both the people and the decision makers. Despite these difficulties and challenges, the attainment of these objectives is not impossible nor unrealistic. On the contrary, the current state of affairs can not remain. The Palestinian economy lacks the natural resources to enable it sustain itself to the present levels and the prospects of expanding labor market are not very encouraging despite the fact that unemployment figures have decreased in the past few years as a result of an increase in public sector employment and a relaxation in Israel’s closure policy. With proper planning and vision, the Palestinian economy is likely to grow. Palestinians carry with them diverse experiences and skills needed in many countries around the region both in terms of employment and in the provision of services.

The question then is how can the Palestinian economy use its human resources efficiently and effectively? Obviously, the foremost requirement is the attainment of the Palestinians to their legitimate political rights. Without this condition, the prospects for Palestinian economic development will continue to be bleak. The efforts by the international community, for example, and the aid injected into the Palestinian economy in the past few years was intended for sustaining the political process rather than for enhancing the Palestinian economy. The economy continued to decline despite some positive indicators because the impeding effects of the Israeli occupation on the Palestinian economy continued as always. Israel continues to exploit the Palestinian markets and remains to be the main economic partner with the Palestinians. The resources available in the West Bank and the Gaza Strip are largely dominated by Israel and used for its purposes. The Palestinian land and water are still controlled by Israel so are the roads connecting the Palestinian controlled areas. External trade is still monopolized by Israel through its control of ports. To-date, the Palestinian manufacturers are still dependent on the Israeli suppliers for raw material.

This situation renders the Palestinian economy highly dependent on and extremely linked with the Israeli economy. Because Israel is the stronger side of this economic equation, the Palestinian economy will be unlikely to be strong enough to compete with the influx of Israeli products that flood the Palestinian markets. This being the case, the primary requirement for the development of the Palestinian economy is political independence.

In the view of this researcher, the second requirement for the Palestinian economy is the ability of this economy to absorb the large number of entrants into the labor market each year. The limited natural resources of the West Bank and the Gaza Strip and their inability to compete with the products of other countries necessitate the concentration on combating the causes that undermine and infringe on economic development. The increase in population and the under utilization of women in the labor market are two serious considerations the focus on which will prove to be beneficial and rewarding.

The Palestinian society has for long encouraged high birth rate. Although social behavior contributed to this, the political environment encouraged high birth rate. The Palestinian political speech often demanded the people to have children as a means to combat Israeli occupation.

The current situation is different. The Palestinian Authority through its social, educational, and health institutions started to emphasize the developmental impact of overpopulation. In addition, the Palestinian NGO community, particularly women organizations, started to focus on the impact of population growth on society at large.

Whilst the effort is encouraging, it is not enough. Recent figures show that population growth in the West Bank and Gaza continues to grow steadily. The messages sent to the regular Palestinian family via the media is insufficient and lack substance. Rarely do these efforts influence the behavior of the Palestinian families. Literature and studies show that these messages are rare and are not transmitted effectively by the private or the public media. The reasons behind this failure is attributed fundamentally to two main reasons. The first is the social restrictions that often limit the media from carrying messages perceived to be socially undesirable. Second, the lack of proper understanding and interest by the private and public Palestinian media whose interest is more targeted to political rather than social and economic issues.

The ability to reach people is best achieved via the educational system. It is important to change the behavior of the younbecause they are less susceptible to social restrictions and more sensitive to education. It is the view of this author that education is the single most important focus which the Palestinian leadership should consider in its developmental strategies. The development of the educational system is the key to solving many of the obstacles facing the Palestinian society. Better education provides solutions to the low participation rate of women in the labor market, upgrades the skills of individuals, introduces new ideas and programs, helps in a better and more efficient allocation of resources, encourages tolerance and promotes innovative solutions to social, economic, and political problems. These developments can certainly lead to better and varied employment opportunities which will be accompanied by the new generation of businesses resulting from these developments.

The development of the educational system, however, is challenging and complex because of a number of factors. First, the adoption of new ideas involves the reformation of the entire educational system. Existing teachers and other educators have to be approached in a manner acceptable to them or flexible enough for them to contemplate and inspect. Revolutionary ideas may be fiercely resisted and attacked. Secondly, the required changes necessitate strong support from decision makers who are the ones to allocate the funds for such reformation. Without their support and backing, the restructuring of both the curriculum and the educational system in general is difficult to achieve. Thirdly, the participation of parents and the involvement of the family in these efforts are essential for their success.

To tackle these difficulties, it is important to first concentrate first on the teachers and second on the curricula. The Palestinian Ministry of Education has embarked on a very courageous plan to change the Palestinian educational curricula. However, this campaign was not paralleled with respect to teachers. Until now, teachers are among the lowest paid and training opportunities are seldom for them. This being the case, the Palestinian educational structure is dominated by teachers who lack motivation and interest. Motivated teachers are leaving the educational system or are involved, at the expense of their work, in other activities to help them earn more money. New recruits are discouraged and they seek more rewarding jobs elsewhere.

It is important that the emphasis has to be targeted at lifting the motivation of current teachers by upgrading their professional skills and by properly compensating them for their services. The educational system should also be injected with new recruits who are suitable and capable of transmitting the new curriculum in a manner consistent with the new Palestinian curricula and educational strategy that focuses on the participation of children. Without proper teachers and administrators, the new curricula will not achieve the desired objective. Motivated and competent teachers are the core of that effort.

Such caliber of teachers can also be instrumental in changing and in influencing the parents of children as to the qualities of the messages transmitted to their children. Teacher-parent interaction is vital for the success of such campaigns. The participation of parents will help them better understand the qualities of the new educational system and will act on reinforcing those messages onto their children.

Parents will be encouraged to participate when their kids are confronted with a new style of teaching and curricula whose emphasis is on the involvement of children. Old teaching methods rarely require the involvement of parents beyond their traditional role of reinforcing traditional teaching regiments such as dictation and recitation. New methods will certainly compel parents to interact with the child on different levels that concentrate on the mental, analytical, and application capabilities of the child and not only on his or her ability to recite a lesson.

A proper educational system is perhaps the most essential element in the developmental efforts of the Palestinian society. The solution to the problems confronting Palestinian economic development lies in a modern educational system. Education can help reduce population growth, thus reducing the pressure on the labor market. The adoption of modern teaching policies will assist in the empowerment of women and can help society better utilize the potential benefits of its other half. Instead of being dependent on male income, women can be more involved in income generation and can lessen the dependency on male bread-winners. Changing the attitudes resulting from new educational inputs and practices can be instrumental in providing women with the opportunities to use their skills and contribute their experiences.

Improvement in the educational system will undoubtedly restructure the labor market by injecting it with better-equipped, diversified, and more universalistic human resources. A healthy and productive labor force requires these characteristics. As Mazen Hashweh argues: