Sectors of activity

Agriculture has an important place in the Palestinian economy; it employs 12% of the workforce. A large variety of fruits and vegetables is produced in the West Bank and the Gaza Strip (citrus fruits, zucchini, sweet peppers, tomatoes, celery, cucumbers, eggplants, dates, almonds and grapes). Of all agricultural production, the most important is the cultivation of olive trees (25% of the value of agricultural production). Israeli restrictions on water consumption and land use, as well as on export, force farmers to limit their produce to the crops which bear a high return, destined for the international market, such as strawberries, flowers, etc.

Actually, a number of agricultural products are exported via Israeli Education in collaboration with educational associations at least establishes the same programme for all Palestinian schools. Amongst the problems facing the Palestinian education system is the ever increasing number of students: the number of school children per class is relatively high - 38.9 students on average per class.

In UNRWA schools, the average is 44.3 (50 in the Gaza Strip); 39 as stated in government schools and 25.7 in private schools. intermediaries, who label the products “Made in Israel.” Palestinian producers prefer to pay for this Israeli commercialised service to avoid delays at the customs that could be fatal to perishable goods. The secondary sector (manufacturing and onstruction) employs 37% of the working population. Palestinian industrial production, often operating as family businesses, is characterised by small workshops employing 5 people on average.
This applies to farm products (food, drinks, olive oil) and the manufacturing sector (shoes, furniture, plastic products, and construction materials). In the latter, Palestinian enterprises usually subcontract from Israeli businesses, which increases their dependency on the Israeli market. Construction and services expanded considerably since 1995, when there was a big need for housing after the return of tens of thousands of Palestinians to the West Bank and Gaza at the time of the Oslo Accords, and the new Palestinian Authority required new administrative buildings.

There was also a construction boom and extension of Jewish settlements in response to the immigration of some million Russian Jews over a 10-year period and the economic prosperity that Israelis experienced during the “peace process” years. During the four years of the al-Aqsa Intifada, however, these expansions have ceased: currently unemployment averages over 40% and closures have made it impossible for many Palestinians to reach their workplaces. Lastly, the tertiary sector is the most important one, contributing more than 73% of the Gross National Product (GNP) of the Gaza Strip and approximately 60% in the West Bank. The public sector employs 24% of the work force in the Gaza Strip and about 15% of the work force in the West Bank. The Paris Protocol (1994) on Economic Relations obliged the Palestinians to co-operate on customs and excise affairs with Israel, in principle to guarantee freedom of movement of capital and goods. Taxation rates were fixed by Israel, which was to remit to the PA the VAT and customs duties on goods transported to the West Bank and Gaza Strip.

In 1998, duty represented 60% of PA revenue. In this sense, Israeli control over custom duties works as a means of pressure on the PA, Israel periodically refusing to transfer taxes owed to the PA. Dependence on Israel is apparent in the fact that 90% of Palestinian import and export takes place with Israel; this dependence has disastrous consequences on the Palestinian economy because of the frequent sieges or total closure imposed on the Occupied Palestinian Territories, especially since the al-Aqsa Intifada. In 2002, the PA’s fiscal deficit was financed by US$464 million of donor budgetary support, mainly from the Arab League states, the EU and World Bank. Nevertheless, the PA had debts with the private sector of $415 million and with domestic banks of US$65 million. At the same time, Israel had withheld clearance revenues of US$700 million. Restrictions on independent economic development has led a high proportion of Palestinian workers to look for work in Israel, which profits from this cheap labour force and means of wielding pressure.

Before the First Intifada, Israel employed 180,000 Palestinian workers every day, compared to 83,000 in 1993 and 22,250 in 1996 (due to a long period of closure and the import by Israel of foreign workers from Thailand, China, Romania and Eastern Europe). Since the beginning of the al-Aqsa Intifada, 110,000 Palestinian workers have directly lost their jobs because they have been forbidden entry into the State of Israel. The median monthly income had decreased from NIS2,800 before the al-Aqsa Intifada to NIS1,600 in June 2003. Some 71% of Palestinian households suffered some form of decrease, of which 45.4% lost more than 50% of their monthly income. As of August 2003, 38.6% of surveyed households were receiving humanitarian assistance (West Bank: 26.3% and the Gaza Strip 63.3%), whereas 79.3% of the households said they needed assistance. Some 44% of the total assistance was provided in the form of food supplies, 30% in cash. By 2004, the percentage of Palestinians living below the poverty line had reached 64%.