The Palestinian Economy. Theoretical and Practical Challenges

Proceedings “The Palestinian Economy: Theoretical and Practical Challenges” 397
2. Palestinian labour force indicators
Considerable differences exist in the distribution of labour force in the Palestinian
Territory based on socio-economic factors. The average labour force participation rate
(LFPR) was 41.6% during the second quarter of 2008. The LFPR rose from 39% at the
end of 1995 to a maximum of approximately 43.5% by September 2000. The rise in
LFPR demonstrated improved confidence in obtaining work in the formal labour market
i.e., work opportunities in the Palestinian labour market generally improved during the
certain periods.
Female LFPR is extremely low, though it increased significantly, from its 1993
levels (6% in the West Bank and 2% in Gaza) up to 16% in the second quarter of 2008
compared to 66.3% among men. The factors attributed to the low female LFPR are
numerous. The weakness of domestic employment growth compared to labour force
growth is one explanation. Shaban argued that the fall in female participation rates is
attributed to the lack of appropriate, particularly public, employment which has limited
women’s chances of participating more actively in the labour force (Shaban 1993). Others
have argued that employed women are unreported since many works in the informal
sector or conceal their involvement in the labour force (Long and Mohanna 1990). The
nature of data collection also leads to low reporting by women on their participation in
the labour market (Al-Qudsi and Shaban 1996).
The total number of employed individuals is 666 thousands in 2007 of 2006, of
whom 84% are male employees. The private sector is the main employer counting for
about 61.3% of employees, followed by the public sector (22.7%), then 10.8% working in
Israel and the remaining working in NGOs and other sectors. Wage employees are about
60.4% of employees followed by 22.9% as self employed and the remaining are
employers and unpaid family members during the second quarter of 2008. The share of
self employed increased since the third quarter 2000 (18%) as a result of rising
unemployment which forced some people to start their own businesses.
The Palestinian economy is characterised by its low absorptive capacity resulting in
a chronic unemployment problem. The unemployment rate in the Palestinian Territories
dropped significantly up to 11% at the end of the third quarter of 2000 but it jumped
significantly to reach 25.8% at the of the second quarter of 2008. The decline in
unemployment was justified by three factors: the formation of the Palestinian National
Authority which absorbed about 150 thousand employees at the end of the second quarter
of 2008, and the real economic growth which reached around 9% until 1999, and the