The economic and social crisis in the occupied Arab territories has deepened markedly over the past year, with rising unemployment and plummeting incomes leading to an “untenable” situation, according to a new report of the Director-General of the International Labour Office (ILO).

However, the report, to be discussed by delegates to the ILO’s 91st International Labour Conference here on Thursday, 12 June, also says “economic and social situation may have stabilized in the first half of 2003, albeit at a significantly lower level than before the outbreak of the intifada in September 2000”.

The crisis also had a deep impact on the economy in Israel, which underwent a second year of recession in 2002 with negative growth of its gross domestic product (GDP), the report says. It cited Bank of Israel estimates that the intifada cost the economy between 3 and 3.8 per cent of GDP in 2002.

The period from June 2002 to May 2003 was marked by a deepening of the economic and social crisis in the occupied territories, the report says, with unemployment rising to between 31 and 38 per cent and cumulative income per capita dropping in 2002 to below 50 per cent of its 1999 level.

“The severe restrictions on movements of persons and goods within the occupied territories and between these and Israel have resulted in a dramatic decline in consumption, income and employment levels, and unprecedented contraction of economic activity, including output, trade and investment”, the report says. “The present situation is untenable and cannot be allowed to continue.”

However, the report also says the situation may have reached a “turning point” since early this year, due to political developments on the ground as well as the emergence of the so-called “road map” proposed by the international community aimed at creating an independent Palestinian State and ending the long-standing conflict within two years.

The report also cited “a moderate easing of closures” as of early 2003 compared with the near-complete closure imposed during March-April 2002, as well as an increase in the number of work permits issued to Palestinian workers for employment in Israel, resumption of tax payments collected by Israel on behalf of the Palestinian Authority, the resilience of Palestinian workers and employers and the flow of international aid as factors in a modest stabilization of the economic situation.

Nevertheless, border closures in the occupied territories remain a “dominant feature of daily life”, and the construction of a separation wall along the western border of the West Bank, military incursions, destructions and losses of human lives, and the pursuit of the Israeli settlements policy have lead to further economic and social deterioration, the report says.

Referring to the new perspectives opened by the “Road Map”, the report underlines that “building labour institutions becomes an essential component towards statehood”.

The ILO has already contributed US$1.4 million from its own budget for the establishment of a Palestinian Fund for Employment and Social Protection. The report says the ILO “will have a role to play in dealing with issues of employment, social security and social dialogue”.

“The ILO has taken and will continue to take steps to strengthen its technical cooperation programme aimed at creating sustainable jobs and future employment opportunities and reforming labour institutions”, says the report.

Working with workers and employers, the ILO will focus on assisting the Palestinian authority in implementing its reform agenda and the establishment of statehood, cooperating with the Ministry of Labour and employers’ and workers’ organizations to become fully functioning institutions within a democratic state; providing technical assistance for establishing and running the Palestinian Fund for Employment and Social Protection; and assisting in the creation of a badly needed system of social protection.

“There is a clear role for healthy social dialogue to prepare and accompany the many reforms required to lead to economic recovery and provide Palestinian workers with rights at work and productive and remunerative employment and protection”, concludes ILO Director-General, Juan Somavia. “In the final analysis, the success of the ILO’s programmes with our constituents is premised on positive political developments and collective cooperation. We shall always be prepared to support dialogue for peace. All of us must nurture hope and move ahead.”

Related Links:

Report: The situation of workers of the occupied Arab territories (PDF) International Labour Conference, 91st Session, 2003