PALESTINE Union for the Mediterranean country fiche July 2013
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1 PALESTINE Union for the Mediterranean country fiche July 2013
2 Contents Key demographic and economic characteristics...3 Main political and social developments...4 Education and training outcomes...5 Labour market trends and challenges...6 Employment policy measures...7 PALESTINE 02
3 PALESTINE 1 : UNION FOR THE MEDITERRANEAN COUNTRY FICHE Key demographic and economic characteristics Palestine has a population of 4.42 million living in West Bank and Gaza Strip, 1.4 million living inside Israel and 5.6 million living in exile in mid of 2013, with the highest population growth (2.66% in 2012) and fertility rates (4.4 children per women) in the region, albeit declining from 3.3% in the last decade 2. The share of the population under 14 ranks amongst the highest not only in the region but also in the world, at 40.1% in 2013, thus putting enormous pressure on current social services (schools, health and housing). When this is combined with the increasing share of age group (29%), the share of population under 30 years reaches to almost 72% of total population. Thus the need for future jobs is expected to increase further with increasing pressure of the young entrants to labour market. Due to unique characteristics of the country s history, mainly linked to political conflicts and forced expulsions, Palestinians living abroad account for 50% of the overall population (11.6 million people). This number includes the Palestinian refugees living in the neighbouring Arab countries mainly in Syria, Lebanon, Jordan and Egypt but also labour emigrants in the Gulf countries, Europe, Canada, South America and Australia. Palestinian emigrants are generally well qualified, 7.2% being university graduates. Remittances from the Palestinian emigrants contribute significantly to the national GDP and more than doubled from USD 572 million in 2003 to estimated USD million in GDP growth is severely affected by political instability and difficulties in the progress of the peace process. The years have been affected by negative trends with a contraction around -12%. In the worst years of the crisis average income per capita has declined to the poverty line, leaving about 63% of households living below the poverty line. The annual growth rate of GDP improved to around 6% from 2003 to 2005, and after a decline, it reached again to 9.3% in 2010 and 9.9% in In 2012 real GDP increased by 5.9% to USD million, reflecting a real GDP per capita of USD Distribution of employment by economic activity reveals that services sector dominate employment by 63.1% of workers in 2012, construction employed 15.3%, manufacturing, quarrying and mining employed 11.3% and agriculture 10.3% 3. The share of services (including trade and tourism) is constantly increasing in the economy and employment. Palestinian economy is widely dominated by small and family owned SMEs. Indeed 97% of enterprises employ fewer than 10 employees, while informal sector plays an important role in the creation of new jobs in small enterprises. According to the World Bank, the share of labour force that are not covered by social security reaches to 81.2% in Palestine, while the share of self-employment in total employment is 28.7%, a rate calculated based on data 4. The main reasons behind the unfavourable economic conditions were the effect of scarce financial resources and stricter Israeli restrictions on border controls, although a relative ease of restrictions is felt recently in the West Bank. 1 In consideration of the political situation of Palestine (new official name used by the European Union as of 2013), data provided from the various sources (national and international) may refer to different populations and geographic areas (West Bank, Gaza Strip and possibly East Jerusalem). In general it should be noted that a number of international indicators are not available for whole Palestine. 2 All macro-economic and demographic data is from the World Bank and Palestine Central Bureau of Statistics (PSPC). The only exception is the population by age group which is an ETF calculation from the United Nations Population Division (World Population Prospects: The 2010 Revision). 3 ETF (2013), Palestine country note, draft 4 World Bank (2011), The challenge of informality in the Middle East and North Africa PALESTINE 03
4 It is evident that sustainable economic growth and end to the fiscal crisis will require unlashing the Palestinian private sector s potential 5. There are three main requirements for this to happen. Israeli restrictions on access to land, water, and export markets must be significantly reduced. Creating an enabling business environment, as Palestine ranks very low in the World Bank ranking of ease of doing business (131 out of 185 countries in 2011, 177 as it concerns opening a business). Main issues to be addressed are expanding land registration to reduce the price of land in areas A and B, and simplify legal and regulatory environment which is a complex mix of Jordanian, British Mandate and Palestinian laws. Providing more relevant skills for the labour market through a good quality education and training system, in particular increasing the number of technicians and skilled workers in the economy. The economic vulnerability is partly addressed by the public sector which is an important employer (22.5% of total employment in 2012). Until 2011 the annual growth of the public employment sector was 5%, but it has been capped to units annual increase in the framework of the National Development Plan ( ). Despite dramatic drop of the Palestinian labour flows to Israel with high fluctuations caused by changes in Israeli policy, Israeli labour market also provides jobs for around one tenth of the Palestinian labour force ( workers in 2012). The Palestinian government has developed strategies to enhance national competitiveness in industry, agriculture 6, housing and tourism as levers of its economic development, all of which need better qualified human capital. Main political and social developments Palestine is characterised by unique features. Since the establishment of the state of Israel in 1948, Palestinians have lived in a regime of occupation marked by wars (involving also neighbouring countries) and only with the Oslo Agreement in 1993 attempts to put in place a real peace process took shape. Recent years have been troubled by a series of problematic issues such as: the collapse of the peace process; the construction of the separation wall and reduced mobility 7 ; the war conducted by Israel in Gaza in 2008 and forced isolation of local population 8 ; the continued policy of Israeli settlements; and the fracturing of Palestinian political representatives since 2007 with Fatah controlling the West Bank and Hamas controlling the Gaza Strip. An agreement for unity signed in Cairo in May 2011, but nothing has come to reality yet 9. Following the United Nations General Assembly resolution 67/19, Palestine has been upgraded to the status of non-member observer state and in April 2013 the European Union has adopted the formal denomination of Palestine. Palestine is a quasi-governmental entity that has no real authority over its borders or defence policy. It has full or partial control 10 of up to 40% of the West Bank, more than 50% of the Gaza Strip and 98% of the Palestinian population in West bank and Gaza Strip, excluding East Jerusalem 11. Altogether the claim for the Palestinian state would be 18% of the overall Palestine territory under British 5 Stagnation or Revival? Palestinian Economic Prospects, World Bank 6 An agreement with the EU has recently been signed to remove quotas on Palestinian agricultural products for their access to the EU market. 7 Information concerning the political situation in Palestine comes from Israel maintains about 35 external and 50 internal checkpoints and has constructed over 450 roadblocks. 8 According to the Palestinian Centre for Human Rights people were killed, including 960 non-combatants. 9 The deal comes after 18 months of fruitless talks and envisions the formation of an interim government of independents that will pave the way for presidential and legislative elections within a year. 10 According to repartition in areas A, B and C. 11 Apart from Palestinians registered as Israeli citizens since 1948, Palestinian population is divided according to civil status among West Bankers, Gazans and East Jerusalemites (since 1967). PALESTINE 04
5 governorate. Moreover, the Paris Protocol signed between the Palestinian Liberation Organisation (PLO) and Israel in 1994 applies the Israeli trade policy regime in Palestine, a formalisation of the de facto situation in place since 1967 with the intention of a five-year interim arrangement. Continuing until today, this has established a semi-custom union between the West Bank, the Gaza Strip and Israel; and together with Israeli control of borders, goods and labour and the lack of Palestinian currency, this led to a heavy dependence of the Palestinian economy on the Israeli economy and policies. The difficult political situation is reflected in the Worldwide Governance Indicators, although a clear improvement can be noticed in some of the indicators 12. Governance Effectiveness and Regulatory Quality have increased significantly in the last five years, moving from 13.2 to 4.7 and from 16.2 to 57.9 respectively in Accountability remains low 25.6 percentile rank (with an OECD average of 91.6 and 91) while Political Stability stands dramatically at 4.2 (OECD average is 79.1). UNDP Human Development Index ranks Palestine at 110 in 2012, which is only better than Morocco 13. Adult literacy stands at 95.9% in 2013 (PCPS) amongst the highest in the Arab world. Needs for more relevant skills are however registered in practically all economic sectors. The stagnant economic development caused by political instability does not help the development of new skills. The presence of wide groups of disadvantaged like the refugees, the poor, the orphans, the former detainees puts a specific pressure on Palestine to undertake effective actions to promote skill upgrades, active citizenship and personal development. Education and training outcomes Palestinians attach high importance to education. Good education has traditionally been a passport for a better life outside the country. With the setting up of state in need of its own services and infrastructures, education and training are called to play a new role and they are also the object of countless initiatives of international and bilateral donors. As a result the overall situation is quite fragmented and in need of enhanced coordination and governance. Over the period educational enrolment rates for lower secondary level remained stable around 87% gross enrolment rate, whereas high increase was recorded at upper secondary enrolment (74% from 59%) and higher education (51% from 26%) 14. Mean years of schooling for the 15+ population are 8 years, while the school life expectancy for children starting education is 13.4 years in Girl enrolment rates are much higher than boy s at both secondary and higher education. Access to education is not a problem for Palestinian women, but access to labour market is (as it will be detailed in the next session). Educational attainment rates of population 15+ in 2009 reflect improving enrolment trends: the share of population with primary education and less is 40.6%, population with lower secondary education 23.7%, population with upper secondary education 21%, and the share of university graduates 14.8% 15. Although data on quality of education are scarce, quality is recognised as a major critical issue in the Palestinian education and training system. Scores in the TIMMS 2011 test were 404 for math 8 th level students and 420 for science 8 th level students against average above The country is ranked 36 in math and 34 in science out of 42 participating countries in the test. According to the Palestinian educators, the result of TIMMS was not due to the low performance of students but their unfamiliarity with the test techniques. The traditionally high reputation of Palestinian education system shows some 12 Worldwide Governance Indicators (WGI) at: 13 UNDP Human Development Index: 14 UNESCO UIS database 15 Palestinian Central Bureau of Statistics (PCBS), See TIMMS (Trends in International Mathematics and Science Study): PALESTINE 05
6 negative signs and time has come when some revision and innovation is needed at system level beyond successful pilot projects run with donors. The TVET system enrols about 6% of the total number of students in the secondary cycle 17, much below the needs of the economy. Among other problems the system is not attractive and with a limited offer of quite traditional qualifications. Women enrolment rates are quite modest and basically in traditional female sectors. There is a growing problem of skills mismatch, with the TVET sector not adapting rapidly enough to the changes in the labour market. For example, while public sectors like education and health have an increasing need for qualified skill workers, the offer from vocational schools and training centres has not increased to match the identified needs. Part of the negative perception of the TVET sector depends on the low relevance of its provision for the labour market, which is due to inefficiencies and low quality. Teaching has been always characterised by traditional ex-cathedra lessons, with no use of modern teaching methodologies and very limited focus on the development of the key competences of the students. These weaknesses are currently addressed by the on-going TVET reform strategy. A comprehensive TVET strategy has been signed in October 2010 by the Ministries of Education and Higher Education and the Ministry of Labour, which are the main providers together with UNWRA. Among other initiatives, alternative teaching modalities have been successfully piloted. Apprenticeship schemes are now part of the educational offer and can be replicated by new TVET institutions following ministerial approval. Labour market trends and challenges The Palestinian labour market is characterised by the geographic and administrative segmentation between the West Bank, the Gaza Strip and Israel, a very young population and very low labour market participation. Despite some differences, each segment operates within its own labour market characteristics and has its own employment figures and wages. Compared to the West Bank, the Gaza Strip has done markedly worse along all measurable labour market dimensions; higher unemployment, lower activity and employment rates, lower wages and smaller private sector. In 2012, activity rate is 43.6% mainly due to very low activity rates of females (17.4%) and high shares of students 18. Same applies also to very low employment rates: 32.6% is total employment in 2011 (11.3% females against 53% males). Unemployment rate has increased in the last years; standing at 23.9% in 2013 (23.2% males, 27.1% females) 19. Unemployment particularly hits young people (15-24 age group) with 38.8% of unemployment rate. However, young females have much higher unemployment rate (49.6%) than young males (36.8%). Employment and unemployment are affected by two main factors: gender disparities in activity rates and educational attainment. Looking at the unemployment rate, the major efforts undertaken by the Palestinian authorities and by individuals to increase access to the higher levels of education have had a limited effect on employment. In 2011 overall unemployment rate for university graduates was 24.8%, while it was only 16.7% for people with upper secondary diploma. University graduates suffer the disadvantages of an overly academic education and the resistance of a labour market dominated by SMEs to recruiting more expensive human resources. However if you look at males only the investment in education does pay back, as unemployment rate decreases regularly with the increase of education level and employment rate for male university graduates is very high (75%). Therefore, high unemployment rate of university graduates is due mainly to the female unemployment rate (39.6%). This is the highest unemployment rate at all educational levels, despite the very limited female activity rate (only female university graduates). The data clearly shows that university 17 ETF Torino Process report 2010; ETF Regional Employability Review Palestinian Central Bureau of Statistics, LFS All labour market data come from the Palestinian Central Bureau of Statistics, LFS 2012 PALESTINE 06
7 education significantly increases the female activity rate, but it does not succeed in providing enough jobs for women. Overall, it can be claimed that higher education still offers a promising future for Palestinian males, but not for females. This has two important consequences: most employed females have a degree (with the exception of females working in agricultural family businesses) and female graduates face specific entry problems in the labour market. Specific policies addressing these problems could have a big impact on the employment situation in the country. Employment policy measures Employment has been considered a priority by Palestinian government that was put in the Labour Strategy. A new Labour Law was enacted in 2000 to regulate labour market. In a participatory proves and with GIZ involvement, a National Employment Strategy (NES) was developed and approved in This document is the basis for different on-going reforms in the field of employment policies and institutional re-shuffling. The NES is aimed to be linked to the economic strategy (for job creation), TVET strategy (for skill requirements of enterprises), planning and social development (for social development and assistance), and youth and women strategies (for higher activity and employment rates). An action plan and implementation plan followed the strategy in which the following main steps were foreseen to reach the objectives: establishing social partnerships through activation of the socio-economic council, TVET councils, and community based trainings, among others; creating a public employment agency for implementing active labour market policies, managing a labour market information system and a career guidance system; revitalizing the Palestinian Fund for Employment and Social Protection (PFESP) which was created in 2003; attracting renowned multinational private employment agencies; creating a general commission for regulating cooperatives; enhancing cooperation between employment agency, TVET, the fund and employer organisations. From the institutional point of the view, the NES foresees the establishment of the following bodies with an equal number of representatives from government and social partners in the Board of Directors: National Employment Agency, General Commission for the Regulating Cooperatives, Fund for Employment and Social Protection, and Technical and Vocational Education and Training Agency (this was taken out from the revised TVET strategy). Of these institutions only the Palestinian Fund for Employment and Social Protection (PFESP) is now operational. Currently it has only five permanent staff and four other staff detached from the Ministry of Labour and it has been delivering three programmes: providing jobs for graduates in the private sector, supporting companies and SMEs job creation and providing sustainable opportunities for employment. In accordance with the agreement, the ILO should provide a USD grant and the Palestinian government committed to provide USD 5 million annually to the fund (which were never paid). The creation of employment agency provides opportunity to revitalise the fund for the operational priorities envisaged in the strategy. Within the framework of NES, the Ministry of Labour has initiated a number of activities or structures, with the technical support of GIZ. The first of such initiative is the reform of employment/labour offices. Palestine has 16 employment offices in the West Bank and 5 offices in the Gaza Strip. The ministry manages 16 offices in the West Bank with a total of 64 staff (no control of 5 offices in the Gaza Strip). These offices work for the job placement services both in domestic labour market and in the Israeli labour market, and provide services to both jobseekers and employers. Their role has been historically weak, but recently there are some improvements. Out of 16 offices, 8 offices have been transformed PALESTINE 07
8 into one-stop-shop (OSS) where a more comprehensive package of services provided for the jobseekers such as career guidance, VET, job search and job application techniques, including information and work permission to work in Israel (not in settlements which is considered illegal). The Ministry of Labour also works on the development and launch of a web portal providing online services of counselling, vacancies and job matching this year. Setting up local education and training (LET) councils is another initiative to facilitate social dialogue and more employment initiatives at local level. There are four councils active so far in Nablus, Ramallah, Bethlehem and Hebron. The councils include the representatives of government, private sector and NGOs. Although these councils do not have many concrete activities but meetings, they keep the connection between different stakeholders on employment, and provide partnership and networking platforms. For example, in Hebron which is most industrialized city, it facilitates more job placement as employers come up with demand for workers with certain skills. In general, however, the results were very modest with limited success, and the main reason for that is the limited capacity of employers and other actors sitting in the council. Another recent initiative is the launch of the Labour Market Information System (LMIS) in 2013 with the cooperation of GIZ. This is a software system which foresees the voluntary registry of the employed, unemployed, enterprises and sectors with the information of their employees and job vacancies. Any person can register online and update their employment and career information later. Companies should also do the same, registering company information, particularly on the employees and job vacancies. First data on the impact of the establishment of the LMIS are foreseen for late As for the majority of the reforms in TVET and employment sectors years will be needed to assess the real impact of the different initiatives. In the case of LMIS this is particularly true in a country like Palestine, where job mediation has been historically informal. Provision of employment services in Palestine is fragmented. Historically the role of the public sector has not been dominant and the situation is characterised by the active involvement of the NGOs in providing employment services and the weak role of the public and private agencies. Indeed strengthening public employment services and ensuring structured coordination among the different providers are among the key objectives of the NES. The most active private employment agency in Palestine is not in the form of an employment office, training or consultancy, instead, it s an online portal called that connects jobseekers and employers at one place. The website allows employers and businesses to advertise any job vacancies they have on the website, and then jobseekers can look through these vacancies and apply for any suitable job they find. The website is easy to use and it covers all the Palestinian territories along with many specializations. The NGO sector in Palestine, with more than organisations and more than paid employees, is another main player in providing employment services. Some 25.6% of the NGOs have a programme that provides professional training and career development and 5.3% of them have this as their principle programme. Some of these organisations provide solid programmes which are sustained by international and national donors. Sharek s Forum, the Welfare Association (WA), the Palestinian Education for Employment Foundation (EfE) and International Youth Forum (IYF) are the most significant. Finally, the UNWRA is a major partner in providing employment and relief programmes for Palestinian refugees who constitute almost half of the population. A programme started in 2001 whereby in the West Bank job opportunities were offered to beneficiaries through the reinforcement of the one-stop-shop for jobseekers to register, be assessed, trained if necessary and offered a vacancy as soon as one became available ETF Torino Process report 2010 PALESTINE 08
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