The Economic Impacts of Labor Shortage on Certain Key Sectors in the Local Economy

author: Palestine Economic Policy Research Institute - MAS
year: 2023

During the past few years, the increase in the number of Palestinian workers in Israel was accompanied by an alarming phenomenon in the Palestinian labor market; namely, the shortage and scarcity of labor in certain sectors within the local economy, despite the significant increase in unemployment rates, reaching 24.4% in 2022 (and about 13% in the West Bank) (PCBS, 2023a). Meanwhile, the number of Palestinians working in Israel grew to over 200,000 in 2021, though has moderated somewhat since. This ignited wide debate among stakeholders in affected economic sectors, as well as economists and government, in diagnosing the extent of this phenomenon, and its effects on the Palestinian labor market specifically and the economy overall. The Palestinian Prime Minister has affirmed that there is a shortage of labor in the local market, confirmed by both the Private Sector Coordination Council and the Palestine Economic Policy Research Institute (MAS, 2022a). As such, it is useful to shed light on the professions that indicate labor shortages and examine impacts on the Palestinian labor market and the local economy, to propose possible interventions and solutions to this phenomenon, in order to reduce its negative impacts on the local economy.

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