Media coverage
Palestine Economy Portal · 2017-04
Economic experts and private sector representatives in Gaza warned that deductions of up to 30% from the salaries of Palestinian Authority employees in the Strip would lead to a sharp decline in cash liquidity and commercial activity, deepening existing economic and social crises. They said the deductions would harm tens of thousands of families, increase poverty, unemployment, and bounced checks, and weaken the ability of employees and traders to meet their financial obligations.
Economic experts and private sector representatives in Gaza warned that deductions of up to 30% from the salaries of Palestinian Authority employees in the Strip would lead to a sharp decline in cash liquidity and commercial activity, deepening existing economic and social crises. They said the ded…
Experts: Gaza employees’ salary crisis threatens to exacerbate the liquidity shortage
Protests by Palestinian Authority employees in Gaza have continued since they received their salaries for last March with most allowances deducted from them, in a measure justified by the National Consensus Government by the sharp decline in international aid and the “catastrophic” effects of the continued internal division.
A protest in front of the Council of Ministers today, Tuesday, in Ramallah against the deductions from the salaries of Gaza employees
Gaza – Islam Radi – Palestine Economy Portal
Ali al-Hayek, head of the Federation of Industries and the Businessmen Association in the Gaza Strip, highlights that imposing deductions reaching 30% of the salaries of Authority employees in Gaza carries catastrophic repercussions for economic activity and the economic cycle in the Strip.
Al-Hayek told the website “Palestine Economy Portal” that the salary deductions threaten to restructure the priorities of employees and their families in terms of expenditures, in a way that affects the economic cycle and overall commercial movement, especially given their effective contribution to providing cash liquidity on a monthly basis.
He adds that the amounts circulated in the local market in the Gaza Strip outside the banks are the amounts deducted from employees’ salaries, which are relied upon primarily to move the commercial wheel and revive the private sector in light of the multiple crises it is suffering from.
Al-Hayek explains that this development directly threatens businessmen and importers of goods into the Gaza Strip by increasing their losses and reducing their sales, which will consequently undermine their activities and their ability to meet their financial obligations, portending a wide-ranging social catastrophe.
For his part, Omar Shaban, director of PalThink for Strategic Studies in Gaza, highlights that deducting the salaries of Authority employees “affects tens of thousands of families that depend on the salary as a source of income to meet living requirements amid the very harsh economic conditions suffered by the Strip in terms of unemployment, blockade, and the slow pace of reconstruction.”
In statements to the website “Palestine Economy Portal,” Shaban stresses that the exhausted economy of the Gaza Strip depends primarily on the commercial activity generated monthly by the salaries of Authority employees, and that the imposed deductions threaten a sharp decline in this commercial activity and its levels.
He adds that the current development threatens to deepen the gap in living standards in the Gaza Strip, already poor in comparison with general living standards, and would drive an increase in the record rates of poverty and unemployment, along with further decline in commercial activities as they become limited to the minimum basic needs.
Shaban confirms that “it is a duty and a national necessity to reverse these deductions, not to submit to the orientations of some donor countries, and to work seriously on rearranging spending priorities and government expenditure in a way that enables Authority employees in Gaza and their families to live in dignity.”
Gaza-based economic expert Nihad Nashwan agrees that the harm resulting from the salary deductions does not affect only Authority employees in Gaza, but will affect all aspects of economic life in the Strip, because what has been deducted from the salary is in practice the employee’s remaining balance for spending after loans and services are deducted.
In statements to the website “Palestine Economy Portal,” Nashwan points out that the continuation of deductions from the salaries of Authority employees in Gaza will later affect the payment of salaries to employees affiliated with Hamas (whose number exceeds 40,000 employees) due to the decline in purchasing power and thus the drop in tax collection and fees in government departments.
Nashwan also warns that “on the social and humanitarian level, the crises related to cash liquidity will increase, and it is expected that during the coming period reports to the police in this regard will increase as a result of traders and businessmen in Gaza failing to meet their obligations with regard to checks they have issued.”
The Monetary Authority had issued a circular to banks and lending institutions operating in the Gaza Strip, demanding that they commit to deducting 70% of the monthly installment due from borrowers for this month, in consideration of the circumstances of the sector’s employees.
Mohammed Abu Jaib, editor-in-chief of the newspaper Al-Iqtisadiya in Gaza, estimates that the number of Palestinian Authority employees in the Strip reaches 50,000, and it is believed that no less than 85% of them have bank loans and that installments are deducted monthly from their salaries.
In statements to the website “Palestine Economy Portal,” Abu Jaib points out that the banks’ monthly installments deprive the local market in Gaza of about 50% of the cash liquidity transferred by the Authority, thus keeping it locked in the banks’ vaults in the form of installments collected for their benefit.
Abu Jaib explains that the Authority’s deduction from the salaries of its employees means in practice depriving the local market in Gaza of most of the remaining cash liquidity in the hands of employees, which will cause dangerous repercussions for the commercial sector and for the components of the social and economic system in Gaza due to the decline in purchasing power, already exhausted to begin with.
He also warns that employees will be forced to default on repayment of their debts arranged in accordance with their incomes before the deduction, and that this will increase the burdens placed on the commercial sector and businessmen and undermine commercial activities based on imports as a result of the rationing of consumer goods.
In the same context, the Gaza Governorate Chamber of Commerce and Industry warned that deducting the salaries of Authority employees in Gaza will lead to serious and catastrophic repercussions for all aspects of life in the Strip, considering that the largest share of employees are indebted to banks and that the total of what they receive monthly does not exceed 40% of the total salary; after deducting 30% of the salary, they will have no room left to meet their living obligations and repay their debt obligations and public services.
Maher al-Tabba, media officer at the Gaza Chamber of Commerce and Industry, says that this development will cause a major disruption in the circulation of cash liquidity and its shortage in Gaza’s markets, and will lead to worsening economic conditions, further commercial stagnation, and a decline in purchasing power, already virtually nonexistent.
Al-Tabba adds that it also threatens to raise unemployment rates, already high and the highest in the world in the Gaza Strip, which have exceeded 43%, with more than 200,000 unemployed persons, and to raise poverty rates, which have exceeded 65%. It will also cause a significant increase in bounced checks and employees’ failure to pay the installments due from them.
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