Unemployment fears rise as Palestinian Authority introduces hiring freeze

The Palestinian Authority issued a decision last week to halt all new recruitment in the public sector and government institutions. The statement by the Palestinian Authority (PA) presidential office explained that the decision comes as it faces a fiscal crisis that could be further threatened by a bourgeoning public payroll.

Officials in Ramallah are looking to patch a budget deficit projected at over 1 billion USD for 2012.

But locals residents say they fear a hiring freeze would result in further unemployment triggering widespread discontent with a leadership that is already struggling.

University graduate Mousa al-Jamal, who studied engineering, says he struggled to find a job for his speciality and is forced to work at a coffee shop to fend off complete unemployment.

“I have a lot of ambition, I thought that I will work in the public sector and continue with my studies. But now, after I finished university I am working at al-Arabi coffee shop in Hebron. There are no jobs, not only for me but also for my colleagues and friends. Some of them are working in Israel, abroad or in Ramallah. Not a huge number are working in the city, there is a lack of job opportunities,” al-Jamal said.

Another local resident in Hebron, Eid al-Jabari, said the decision to introduce a hiring freeze would damage the West Bank's economic situation.

“Many young men who finish school and university apply for jobs in the public sector as their next chapter in life, but because employment in the public sector has halted they cannot take a new step in life. We do not have many options in the country like other nations,” said al-Jabari, as he played cards with friends at a coffee shop.

Every month, many Palestinians apply for jobs in PA institutions, each hoping to secure increasingly dwindling opportunities.

Ghaleb Abu Sbaeeh, father of a young graduate seeking employment bemoaned his son's unemployed status, saying he had hoped his son would support the family with education fees and maintenance.

“My son applied for a public sector job but is yet to be employed. It harmed me because he was supposed to help me financially. Now my social, economic and physiological situation is not good. I was waiting for him to be employed to help me, then I was surprised that this will not happen. I hoped he would be working by now, but they cut my water supply,” said Abu Sbaeeh.

One analyst says a hiring freeze intended to strengthen the economy will not result in increased unemployment rates.

“I think the decision that the presidential office made to halt employment in the public sector will not harm the work market because the Palestinian Authority did not employ a huge number of new employees, the number of new employees is no higher than 2000. If we compare this number to the employers in the private sector, it is a small number,” financial analyst Basim Makhoul told Reuters.

Earlier this year the World Bank said the PA government must increase trade and spur private sector growth, warning that a heavy reliance on foreign aid was unsustainable in Palestinian Territories.

According to Makhoul, the public sector employs around 160,000 Palestinians as civil servants or in the security forces.

PA faces pressure to reduce its extensive payroll or face collapse.

Poverty and joblessness have increased in the West Bank in 2012, both hovering at around a fifth of the population of 2.6 million.

Palestinians in West bank city of Ramallah voiced anger over the decision to take on a hiring freeze.

“If you halt the employment of young men in the public sector, you open the gates for them to immigrate. Thousands graduate from university, what should they do? When my son graduates from university he will not find work. The Palestinian Authority should invest millions of dollars to employ these new graduates,” said Hakoom, a local resident.

Amid a downturn in productive sectors and with its economic and commercial prospects hamstrung by Israeli restrictions, the PA is deeply dependent on foreign aid to pay its bills.

Of a hoped-for $1.1 billion in donor funds in 2011, the Western-backed Authority in Ramallah received just under $750 million.

A brief report by the International Monetary Fund (IMF) on the economic situation in May described the Palestinian Authority's fiscal crisis as “very challenging” and said foreign aid was “far less than needed to finance the deficit” of around $1.3 billion in 2012.

The productive base for the economy is shriveling while unemployment climbs along with poverty.

Growth is down from a peak of 9 percent in 2010 after the lows of the Intifada to 5.4 percent in the first quarter of 2012 from the same 2011 period.