Beyond Rubble and Reconstruction: Gaza's Lost Jobs Expose a Deeper Economic Crisis

Gaza's employment crisis has reached devastating proportions, with 252,000 jobs lost, unemployment soaring to 85.1%, and US$2.77 billion in labour income wiped out. As the ILO seeks to mobilize US$50 million for Palestinian employment recovery, a widening financing challenge raises questions about whether international support can restore incomes, revive businesses and rebuild livelihoods beyond emergency assistance.

The collapse of employment across the Occupied Palestinian Territory has created an economic recovery challenge that extends beyond rebuilding damaged infrastructure. With Gaza losing 252,000 jobs, unemployment reaching 85.1%, and billions of dollars in labour income disappearing, the International Labour Organization (ILO) is seeking greater international investment to restore livelihoods, revive businesses and rebuild the foundations of Palestinian economic activity.

A new financing effort for the Decent Work and Recovery Programme (DWRP) 2026–2029 has brought together governments, development agencies and labour market representatives. Convened at ILO headquarters by Director-General Gilbert F. Houngbo alongside Qatar and the Netherlands, the high-level meeting produced a €5 million pledge from Italy, lifting total resources mobilized over the preceding year to approximately US$9 million.

Yet the programme's ten priority projects identify approximately US$50 million in basic investment requirements. The contrast exposes a central difficulty confronting Palestinian recovery: international assistance must address immediate income deprivation while supporting employment opportunities and enterprises capable of sustaining economic activity beyond emergency interventions.

When Employment Disappears, Economic Recovery Becomes More Complicated

Gaza's labour market has undergone an extraordinary contraction. Between the third quarters of 2023 and 2025, the territory lost 252,000 jobs, according to ILO figures, while cumulative labour income losses reached US$2.77 billion. An unemployment rate of 85.1% indicates that employment disruption has become a defining feature of the territory's economic crisis.

The disappearance of earnings creates difficulties that extend across households and businesses. Workers lose income, enterprises struggle to maintain employment, and the economic relationships through which labour generates purchasing power become increasingly difficult to restore. Consequently, rebuilding physical assets alone cannot establish whether households have recovered their capacity to earn a living.

The West Bank presents another dimension of Palestinian economic distress. Unemployment stood at 27.9% in the second quarter of 2026, amid movement restrictions and economic contraction. Although the labour market conditions differ considerably from Gaza, the figures illustrate how employment insecurity extends across the Palestinian territory through distinct economic pressures.

Women and young people face particularly restricted prospects, adding an unequal dimension to the employment crisis. Recovery programmes must therefore confront two connected problems: the overall scarcity of jobs and the limited ability of vulnerable groups to participate in whatever opportunities emerge. Persons with disabilities are also specifically prioritized within the proposed recovery framework.

The ILO's employment-centred approach reflects recognition that income restoration and economic reconstruction must proceed together. Physical rehabilitation can create temporary work, but rebuilding livelihoods also requires functioning enterprises, employment protections and institutions capable of supporting labour market participation under difficult conditions.

Why $9 Million in Support Cannot Yet Match the Recovery Challenge

The financing announcements demonstrate both international engagement and the limitations of current commitments. Italy's €5 million pledge increased the resources mobilized for the DWRP to approximately US$9 million, including contributions and commitments from other development partners and US$700,000 allocated from ILO internal resources.

Not all these resources should be treated as immediately available financing. Some commitments remain dependent on agreements being finalized, while the programme's approximately US$50 million requirement relates to ten identified priority proposals. The distinction between pledges, confirmed funding and actual implementation capacity will determine how quickly financial support translates into employment interventions.

Previous ILO activities offer evidence of what targeted assistance can accomplish. Over three years, programmes implemented with Palestinian partners helped generate approximately 130,000 paid workdays while restoring essential infrastructure and services. Businesses received support to preserve employment, while cooperatives were assisted in improving service delivery.

Social protection formed another component of these interventions. ILO technical assistance contributed to rights-based allowances reaching more than 30,000 older persons and persons with disabilities, alongside efforts to strengthen labour institutions, workers' and employers' organizations, labour law reform and social dialogue.

Nevertheless, temporary employment outputs require careful interpretation. Paid workdays represent opportunities to earn income, not necessarily permanent jobs or sustained business recovery. Expanding these activities may provide immediate economic relief, but measuring whether they lead to more durable employment will be essential to assessing the programme's effectiveness.

The proposed DWRP consequently combines enterprise recovery with social protection and labour market governance. Its structure recognizes that employment assistance cannot be reduced to a single intervention: immediate earnings, business continuity and institutional capacity address different weaknesses within an economy experiencing prolonged disruption.

The Next Test Is Turning International Pledges Into Palestinian Incomes

Palestinian participation will be crucial to determining the programme's direction. Labour Minister Enas Dahadha Attari emphasized that recovery should restore incomes and businesses alongside infrastructure, with Palestinian institutions, employers and trade unions shaping the response. Her position reinforces the distinction between externally financed assistance and recovery priorities developed through local labour market institutions.

International cooperation remains equally important. Qatar's Labour Minister Ali bin Samikh Al Marri highlighted investment in skills, employment and enterprise recovery, while the ILO acknowledged contributions from the European Union and several governments supporting its activities in the Palestinian territory.

The forthcoming phase will concentrate on converting expressions of support into financial commitments and operational partnerships. The ILO also intends to coordinate with the UN system and Palestinian tripartite partners to expand employment interventions and establish measurable results for workers, enterprises and communities.

For the programme, meaningful progress will require more than additional announcements. Financing must become operational, enterprises must regain the capacity to support employment, and interventions must demonstrate improvements in incomes and access to work, particularly for women, young people and persons with disabilities.

The key question facing the 2026–2029 recovery effort is whether a programme operating amid severe economic constraints can move beyond temporary income support toward sustained employment restoration. Its results will ultimately be measured through the livelihoods recovered, businesses supported and employment opportunities maintained, not simply the financial commitments announced at international meetings.