The Employee Between the Illusion of Recovery and the Reality of Stagnation: A Salary Crisis as a Model

Author: د. سعيد صبري

By the end of 2024, the Palestinian economy recorded a historic contraction of nearly -27%, leaving heavy repercussions entering the following year. Despite the Palestinian Monetary Authority's estimates of economic growth ranging between 1.6% and 1.8% in 2025, this improvement has not reflected positively on citizens' lives or on the markets, which continue to experience a severe recession. The Palestinian employee, who receives an incomplete and delayed salary, stands at the heart of this paradox: numbers on paper versus a suffocating crisis on the ground.

Partial Salaries and an Escalating Crisis

The number of Palestinian Authority employees is about 153,000, and the monthly salary bill is nearly one billion shekels (approximately $300 million). However, for years, salaries have not been paid in full, and the government often pays only 70% of salaries. In April 2025, only 35% of the salary was disbursed, while only 50% of the June salary was paid (which was delayed until September), with a minimum not exceeding 2000 shekels, reflecting the scale of financial challenges and the accumulation of dues.

Accumulated Obligations and Expanding Debts

Partial salaries do not meet the minimum needs of employees, forcing them to borrow or defer payments for obligations such as school and university fees, bank loans, and basic living bills. This reality has produced a state of chronic financial pressure, leading many into a spiral of debt that expands month by month. The effects of the crisis are not limited to financial aspects only, but have extended to social and psychological conditions; many employees have postponed significant life decisions such as marriage or purchasing a home, while the thought of migration has become a serious option for a large percentage of young people seeking stability.

Market Stagnation and the Absence of Recovery

The decline in per capita income has quickly reflected on local markets, where household spending is limited to essentials. This contraction in demand has caused wide commercial stagnation, forcing many traders and small business owners to close or reduce activity, weakening the private sector's ability to contribute to creating new jobs.

Despite optimistic estimates of limited economic growth, reality indicates an actual recession. What is recorded on paper as growth does not reflect any true recovery; rather, it is merely "technical growth" that conceals stagnant consumption, a continuation of halted investments, and a slowdown in production.

Financial Imbalance and Dependency on External Sources

The self-revenues of the Palestinian Authority range between 350 to 400 million shekels monthly, which is insufficient to cover salaries and basic expenses. This structural deficit explains the heavy reliance on withheld clearance funds from Israel and declining foreign aid, making any delay in financial flows a direct cause of a monthly crisis.

By the end of 2023, the government obtained a consolidation loan of 1.4 billion shekels (approximately $388 million) to cover part of the salaries and urgent obligations. Although the loan allowed temporary leeway, it later turned into a heavy burden, as installments began to come due amidst declining revenues.

Absent Solutions... and an Anticipated Vision

What the Palestinian employee faces today is not a transient crisis, but rather the result of accumulations requiring radical reform. Cosmetic solutions are insufficient; a comprehensive vision should be pursued based on:

●     Restructuring salaries and linking them to actual revenues.

●     Reducing disguised unemployment within the government apparatus.

●     Expanding the tax base by combating evasion and integrating the informal economy.

●     Establishing a national salary fund that ensures a minimum dignified amount during crises.

●     Supporting agriculture and industry by substituting imports and promoting local production.

Such measures are not merely theoretical proposals but form a true entry point for building a more resilient economy that enhances financial independence and restores dignity and role to the employee in development.

Conclusion

The Palestinian employee is no longer just a victim of a financial crisis, but is living at the heart of a comprehensive economic and social crisis. The continuation of the current situation without real reforms threatens not only his livelihood but the stability of the entire Palestinian community.