Jerusalem — Poverty is growing in the occupied West Bank amid the war in Gaza between Israel and Hamas.
The West Bank is facing its worst economic crisis in two decades due to Israel’s ban on Palestinian day laborers from returning to their manual jobs in Israel, a situation that began four months ago when Hamas attacked Israeli communities near the Gaza border.
This brutal incursion deeply affected Israelis’ sense of security and led to a military response that has faced international criticism for causing significant civilian casualties and a humanitarian crisis.
The approximately 120,000 Palestinian workers who had permits to work in Israel supported around 600,000 people in the West Bank, about a quarter of the territory’s Arab population. This area, seized by Israel during the 1967 war, is recognized by the international community as the future core of an independent Palestinian state but remains under Israeli military and settler influence, often at the expense of Palestinian land.
At A Glance Economic Crisis Hits West Bank: The West Bank faces its worst economic downturn in two decades due to an Israeli ban on Palestinian day laborers. Impact of Hamas Attacks: Following Hamas attacks near the Gaza border, Israel's security concerns lead to a ban, deeply affecting economic and social life in the West Bank. Struggle for Survival: Approximately 120,000 Palestinian workers, supporting around 600,000 people, are unable to return to their jobs in Israel, pushing many into poverty. Construction Sector Suffers: Israel's construction industry faces a labor shortage, prompting a search for workers from abroad. Dire Predictions of Violence: The economic strain and absence of political solutions may lead to increased violence in West Bank. Israeli Housing Crisis Worsens: The lack of Palestinian laborers exacerbates Israel's severe housing shortage, impacting the cost of living. Political vs. Security Concerns: Critics argue that the worker ban is politically motivated, overshadowing manageable security issues. International Attention Lacking: The deepening crisis in the West Bank receives minimal global focus due to the emphasis on Gaza.
Israeli objections to the return of Palestinian workers are based on security concerns, a stance that has gained public support following the October 7 Hamas attacks, including killings and hostage-taking. The fear of Arab attacks has risen since then, leading many Israelis to favor reducing contact with Palestinians. However, Palestinians view the exclusion of workers as collective punishment that devastates economic and social life, pushing increasing numbers into poverty and despair.
For decades, Israel has obstructed the development of a viable Palestinian economy, leaving many workers without alternative employment options. The absence of these workers has severely impacted Israel’s construction sector, which relies heavily on labor from the West Bank. The Israeli government and the Israel Contractors Association are now looking to quickly bring in workers from India, Sri Lanka, and other countries to fill the gap.
Rabeh Morrar, director of research at MAS, the Palestine Economic Research Institute in Ramallah, described the situation as dire, with little hope of the workers being allowed to return: “Since the second intifada (2000-2005), we have never seen such a collapse,” he said.
“Many families I know can’t afford enough food,” he added. The weakened and financially strained Palestinian Authority is unable to provide a safety net, and support from extended families is limited as they too struggle to survive, Morrar said.
Many families I know can’t afford enough food.
Rabeh Morrar, director of research at MAS, the Palestine Economic Research Institute
Morrar predicts that without a political resolution, the anger over Israel’s bombardments in Gaza and the economic crisis will lead to an explosion of violence in the West Bank. “People will feel there is no choice but violence and intifada (uprising),” he said.
On the Israeli side, the absence of Palestinian laborers is worsening a severe housing shortage. “For four months, nothing has moved,” Yannay Spitzer, a professor in the economic department at Hebrew University, told TRENDS. “This is a blow to attempts to reduce housing prices and will affect the cost of living.”
Spitzer, who supports allowing workers to return to their jobs, emphasized that the overall impact on the much larger Israeli economy is minimal compared to the severe blow faced by Palestinians.
With a prominent Israeli former general, Amos Gilad, stating that the security issues are manageable and advocating for the return of Palestinian workers, critics argue that the real reason for the ongoing ban is political. Key opponents of the workers’ return are far-right, anti-Arab politicians Bezalel Smotrich and Itamar Ben-Gvir—Netanyahu’s powerful coalition allies, whose views are overriding those of members of the security establishment who fear the violent outbreak Morrar is predicting.
We don’t care. We have to get things moving. Israelis don’t do this work.
Shay Pauzner, deputy director-general, Israel Contractors Association, on replacing Palestinian workers
The crisis is deepening across the West Bank, yet it receives little international attention due to the focus on Gaza. Ramadan Safi, director of the Orbit engineering company in Ramallah, told TRENDS, “I’ve helped people who are out of work and trying to stay alive. People don’t have money for medication or to pay for water and electricity.”
He added that many stores are closing due to the lack of purchasing power among workers, and merchants are often left with checks that bounce. Army-imposed road closures within the West Bank are hampering travel between key cities, worsening the situation, he says. In his own firm, Safi had to implement an emergency plan to stay afloat. “There are five people working in my office, and I’ve told them that for the next three months, they will only receive fifty percent of their salaries,” he said.
In the town of Husan, near Bethlehem, the situation is dire. Council head Jamal Sabatin reported that locals are severely affected, with about half of the labor force previously employed in Israel. “People turn off their electricity for part of the day because they can’t afford to buy new cards,” he explained. A local grocer, Haj Bassam Hassan, told TRENDS he can no longer afford to extend credit to unemployed workers, fearing he may never be repaid.
“The pressure is great, and I think there could be an explosion,” Hassan said.
In the neighboring village of Wadi Fukin, the atmosphere is similarly bleak. “Most of the people who worked in Israel are now at home all day, just wasting their time and waiting,” said an unemployed worker who preferred to remain anonymous.
Samir Hazboun, an economist and chairman of the Bethlehem Chamber of Commerce, said that about 20,000 people from the Bethlehem district, out of a population of 230,000, used to work in Israel. “In addition to the direct impact on 20,000 families, there are indirect effects because people who earned money in Israel spent it in Bethlehem. And there are social effects. People who had a higher income now cannot pay their children’s school fees,” Hazboun added.
Israeli far-right opponents of allowing workers back compare the moderate Palestinian Authority in the West Bank, which cooperates with Israel to prevent attacks on Israeli targets, to Hamas. They claim that, like Hamas, the PA aims to destroy Israel, arguing there is no reason to assist it by allowing workers to return.
“The Palestinian Authority and the residents of Gaza have one goal: to kill us,” said Moshe Solomon, deputy speaker of the Knesset from Smotrich’s Religious Zionism party.
Despite the security establishment’s warnings, Prime Minister Benjamin Netanyahu has sided with Smotrich and Ben-Gvir.
Smotrich said his point was validated recently when two workers from the southern West Bank carried out an attack in Raanana, north of Tel Aviv, killing a woman and injuring nineteen others. The attackers were in Israel without permits and had not undergone security vetting.
Many Palestinians affected by the ban have spent years working in Israel, earning wages lower than what Israelis receive for the same jobs but higher than those in the Palestinian Authority or the limited options available in the weak Palestinian private sector. Some, especially construction workers, faced dangerous tasks, while others were exploited by middlemen who charged high fees to arrange their employment. Nonetheless, Palestinian workers were typically paid well above the minimum wage in Israel.
However, according to the Israel Contractors Association, no one is irreplaceable. Forty-five percent of Israeli construction sites have shut down, and there’s a rush to bring in workers from India, China, and Uzbekistan. “Because of the killing [by Hamas] on October 7, you would have to persuade the public to take the Palestinians back. This will not happen soon,” the association’s deputy director-general, Shay Pauzner, told TRENDS.
When asked if there were any concerns about replacing Palestinians, Pauzner said, “We don’t care. We have to get things moving. Israelis don’t do this work.”
He noted there is a “giant demand” for the jobs and that many of the Indian and Sri Lankan workers previously worked in the United Arab Emirates.
Spitzer, the economist from Hebrew University, argues that excluding Palestinians is misguided. “It is a mutual benefit for both economies to continue this relationship. It makes sense to boost the Palestinian Authority and ensure they have something to gain from non-violence,” said Spitzer.
He further mentioned that excluding Palestinian workers makes sense “only if your long-term view is to choke off the Palestinian economy and you think that everything that is good for them is bad for us.”