The Capacity of the Construction Sector in the West Bank to Absorb Palestinian Workers Laid off from the Israeli Labor Market Following the War on the Gaza Strip 2025

The building and construction sector is one of the key drivers of the Palestinian economy, serving as a major source of employment and a catalyst for growth across linked economic sectors. However, this sector faces structural, political, and financial challenges that undermine its capacity to absorb labor. This became even more profound following the war on the Gaza Strip during the fourth quarter of 2023, and the accompanying comprehensive closure of the West Bank, denying the entry of approximately 150,000–200,000 Palestinian workers to work inside the Green Line. Most of them had been employed in the building and construction sector, making up two-thirds of Palestinian workers in Israel and its colonies. This led to an unprecedented rise in unemployment rates in the West Bank, from 13% in the third quarter of 2023 to 32% in the fourth quarter. The building and construction sector was the most affected, with the unemployment rate rising from 15% in the fourth quarter of 2022 to 68% in the corresponding quarter of 2023, alongside a sharp contraction in economic activity and a decline in the sector’s value added by 27% in 2023 compared to 2022, followed by a larger decline of 38% in 2024 compared to 2023.

The study examines the situation of Palestine’s construction sector under the current political and economic situation, while assessing its capacity to absorb workers laid off from the Israeli labor market, who have become part of the ranks of the unemployed, in the local labor market in the West Bank, which already suffers from high unemployment rates. The study also aims to analyze the capacities, policies, and available means to strengthen the sector’s ability to absorb labor within the present conditions and restrictions. It should be noted that the study does not aim to present a comprehensive development plan for the construction sector, nor to estimate the scale of destruction in the Gaza Strip or the scenarios for reconstruction; rather, it focuses on the West Bank over the short and medium terms, given the continuation of the war and the profound uncertainty it imposes on the Palestinian economy.