Technological advancements and foreign investments, estimated at $22.8 billion, have propelled the Israeli economy to rank tenth globally in 2022. Economic growth reached 4.8%. These numbers are significantly higher when compared to the Palestinian economy, where the Palestinian GDP reached $13.6 billion in 2021, equivalent to 2.6% of Israel's total GDP of $ 521.69 billion .
This figure is very low, especially considering that the Palestinian society is highly fertile, with a population growth rate of 4.2%, while the population growth rate among Israelis is 2%. Additionally, the inflation rate in the Palestinian economy is 6% and unemployment is 25%, whereas inflation in Israel in 2022 is approximately 2.3% and unemployment is 3.2%.
Overall, these numbers indicate that the labor force in the Palestinian economy is very limited, which necessitates Palestinians to seek employment in the Israeli market. Additionally, the Israeli labor market has a high demand for cheap Palestinian workers compared to Israeli workers. According to the Palestinian Central Bureau of Statistics' labor market report in 2023, the average monthly wage for a Palestinian worker in Israel was approximately 3,500 shekels (around $880), while the average wage for an Israeli worker, according to the Israeli Bureau of Statistics in 2022, was about 11,809 shekels per month (approximately three thousand dollars).
As a result, in the second quarter of 2023, approximately 139,000 Palestinian workers were employed in Israel, according to the Palestinian Central Bureau of Statistics. The majority of these workers were from the West Bank, as reported by Agency France-Presse. The number of workers from Gaza in Israel in 2023 was only 18,000 employed.
In fact, the number of Palestinian workers coming from Gaza has declined since Hamas took control of the sector in 2007. At that time, Israel revoked permits for 120,000 Palestinian workers due to security concerns amidst its blockade of the sector. This has undoubtedly affected the economy in Gaza, resulting in an unemployment rate of 50%, a terrifying number considering the population of nearly 2.2 million, with more than half being children. This situation has forced many workers to comply with the regulations imposed by Hamas, the de facto governing authority in Gaza.
The massive destruction that targeted the infrastructure of Gaza after the events of October 7th, 2023, due to the Israeli targeting of distributed spending within the cities of the Gaza Strip, resulted in an economic catastrophe that cannot be rebuilt, especially if Hamas continues to govern this sector. Hamas is listed on international terrorism lists, making the process of reconstruction that requires international aid difficult. If the Islamic Republic of Iran decides to bear the cost of reconstruction as it did after the July 2006 war in the southern suburbs of Lebanon, this would mean absolute dominance of Hamas over this sector, and the deprivation of 18,000 Palestinians from employment in Israel, resulting in Gaza's economy losing approximately $172 million annually, in addition to losing many services provided by Israel such as electricity, water, and the internet.
This damage will not only affect the Gaza Strip but will also extend to a section of Palestinian workers residing in the West Bank areas because the Israeli state will be forced to increase its security control over Palestinian workers in its territories, and this will mean:
- Subjecting work permits to higher scrutiny, which requires more time to issue them.
- Increasing the duration of security inspections at border crossings, which means more time loss for road workers.
These factors pose a significant threat to Palestinian workers, as they may face higher levels of discrimination that can negatively impact their salaries and benefits. According to the "Workers' Address" association, only 4% of Palestinian workers have received compensation for sick leave days taken in Israel, due to the inefficiency of the healthcare fund and failure to report financial entitlements. Additionally, retirement funds have neglected the rights of Palestinian workers, resulting in a cumulative $1.5 billion without disbursement as reported by the organization in 2019.
In order for a Palestinian to obtain a work contract in Israel, they must acquire a work permit within Israeli territories. This requires submitting an application to the Israeli authorities, which must be endorsed by the Israeli employer's name, followed by a security check. Furthermore, workers with work permits must daily pass through Israeli military checkpoints that separate Palestinian and Israeli areas, resulting in significant time wasted. Palestinian workers are unable to rent within Israeli settlements, incurring additional transportation costs.
The Israeli state is undergoing significant economic transformations, especially if the India-Europe route passes through its territory. Therefore, it needs a large workforce, and certainly it needs the Palestinian workforce that is geographically closer to it. Hence, it is the responsibility of the Israeli government to seriously consider creating channels that facilitate safe labor movement for Palestinians in its territories. Perhaps the best way is to have competent authorities within the Palestinian leadership that implement peace-oriented programs. Similarly, the Israeli side should also work in the same manner because peace is in the interest of the economy and is an enemy to extremist groups that thrive on the rhetoric of hatred spread by Tehran throughout the Middle East region.
 The IMF/ the West Bank and Gaza
 An Overview of Israel’s Economy/ Nasdaq/ NOV 3, 2023
 I24, Jan 06, 2022
 The Palestinian statistics for the labor force survey for the second quarter.
 Israel deports thousands of Palestinian workers back to Gaza’s war zone/ AP/ BY TIA GOLDENBERG AND ISABEL DEBRE/ November 3, 2023