Over the past two decades, the Palestinian economy has not created enough jobs to absorb new entrants to the labor market. This even as labor force participation rates remained among the lowest in the world for women (19%).
There are large disparities in the labor market between governorates and cities, reflecting geographic fragmentation and the spatial mismatch between labor force and employment growth. The gap between the unemployment rate in the West Bank (13%) and in the Gaza Strip (45%) has widened sharply over the past 15 years.
The IMF recommends facilitating job creation in the private sector, particularly in high-productivity market service sectors, to help absorb often well-educated newcomers to the labor market. It also suggests that the Palestinian Authority implement incentive mechanisms to increase women’s participation in the labor market.
However, the institution considers that the reforms of the Authority will not be enough on their own to meet the challenges of the labor market, except to relax the restrictions imposed by Israel on the movement of people and thus boost growth.
Overall, a strong employment elasticity to growth of 0.7 suggests that better labor market outcomes and higher growth would go hand in hand.
Source Embassy of France in Lebanon