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Executive summary

The purpose of this assessment was twofold. The first objective was to get a sense of the impact on household economic security of the financial restrictions imposed on the Palestinian Authority (PA) after the election of the Hamas government. The second was to identify the indigent sections of the population, and to classify them by current income, expenditure patterns and coping mechanisms.

• To achieve these objectives, the ICRC relied on the Household Economy Approach (HEA) and used its 2002/2003 HEA assessment of the West Bank as a baseline. It also used several reports on the West Bank and the Gaza Strip as background information.
• The assessment was qualitative rather than quantitative. It relied on discussions with focus groups consisting of village leaders and detailed interviews with members of the households themselves. There were 36 focus group discussions and 38 household interviews in the West Bank (10 locations in the districts of Salfit, Hebron, Jenin and Nablus). In the Gaza Strip, there were 12 focus group discussions and 33 household interviews (five locations in the Gaza City, Khan Younis and Rafah areas). These discussions and interviews took place in August 2006.
• In the areas assessed in the West Bank, the various communities classified indigents into four wealth categories: "very poor", "poor", "middle" and "better-off" (see graph below). In the Gaza Strip, the communities had difficulty distinguishing between the “poor” and the "very poor."
• The "poor" and "very poor" categories were defined as those households earning below 1,000 and 500 NIS (USD 232 and USD 116) per month respectively in the West Bank, and households earning below 500 NIS (USD 116) in the Gaza Strip.
• The assessment took into account mainly cash income.
• In the West Bank, wealth analysis showed that the situation in urban areas was similar to that in rural areas. That was a change from 2002/2003 when an ICRC assessment found that rural households were more economically insecure than urban households.
• In Gaza, wealth analysis revealed that the situation there was comparatively worse: the threshold between "middle" and "poor" households was much lower than in the West Bank. In Gaza those households that were earning 500–1,000 (116–232 USD) per month were defined as "middle", while "poor" and "very poor" households (one category in Gaza) were those that earned less than 500 NIS (116 USD) per month.
  ©ICRC/A. Barsony /il-e-00312
• An estimated 14-18% of households earned less than 500 NIS (116 USD) in the West Bank; for the Gaza Strip that figure was 58-64%. This might be explained by the fact that in Gaza the economy depends almost completely on external factors, which are very unfavourable.
• Income sources: These varied from one "poor" household to the next; they included day labour in construction, farming and fishing. These opportunities, although certainly better in the West Bank than in Gaza (except for fishing), were decreasing.
• Other income sources: Among these were small farming and trade, local borrowing, gifts from relatives and friends or neighbours, cash and goods distributed by Zakat committees on the basis of specific criteria (to orphans, widows, disabled persons, etc.), remittances from relatives abroad and the sale of assets, including land.
• Humanitarian assistance in Gaza: Most "poor" refugee households in Gaza were receiving assistance, mainly from the United Nations Relief and Works Agency (UNRWA). The assistance was being provided in the form of food, but was supplemented with cash for approximately 18,000 "hardship" households. It was estimated that approximately 70% of refugee households in Gaza were receiving regular assistance. The number of programmes offering households an additional source of income over time, such as the job-creation scheme implemented by the Palestinian Authority (PA), had decreased since the onset of the financial crisis.
• Humanitarian assistance in the West Bank: This was more difficult to assess comprehensively. However, food-for-work schemes run by the World Food Programme (WFP) were cited as playing an important role, as were UNRWA assistance for refugee households and cash assistance from the Social Affairs Department which mainly targeted social-welfare cases.
• Expenditure patterns: In most cases, basic food items accounted for more than 70% of household expenditure. Hygiene products, school costs and cooking gas made up the rest. Basic food items included wheat flour, rice, pulses, sugar, oil, vegetables, coffee, tea and spices. "Poor" families were buying larger quantities of high-energy foods, particularly wheat flour, and purchasing more vegetables when prices were low.
• "Very poor" households, the majority of whom lived in Gaza and earned below 500 NIS (116 USD) per month, had to rely on several coping mechanisms to meet their basic requirements.
• The communities surveyed thought PA employees, whether or not they had received their salary the previous six months, were "better-off" compared with persons relying on irregular sources of income. This can be attributed to the following factors: PA employees still had better access to credit and loans and usually more savings or assets as well, and were also more likely to have educated relatives who could support them.
• The situation for "poor" households in both the West Bank and the Gaza Strip had significantly worsened over the previous four years.
• The findings of this assessment could be contrasted with the ICRC study carried out in 2002/2003 in the West Bank, which followed a similar methodology. The study demonstrated the impact of unemployment after the intifada and of the restrictive policies imposed at the time.
• In both Gaza and the West Bank, communities regarded themselves as having grown poorer over time. Communities interviewed before the intifada estimated that over 50% of West Bank households earned above 2,000 NIS (464 USD) per month. In addition, the wealth thresholds (in terms of cash income) used to define the "better-off" category were much higher before the intifada than those used in 2003 and 2006.
• The World Bank poverty threshold of 2.3 USD <small>[Food Insecurity and Vulnerability Information and Mapping System (FIVIMS) – Food Security Brief – Number 1 (World Bank Country Brief May 2006) ]</small> per person per day translates into 1,863 NIS (414 USD) per month for a family of six. On that basis, households in the areas assessed fall well below the poverty line if their cash income alone is considered. Such "poor" households usually supplement their cash income by resorting to various coping mechanisms, including support from relatives, credit or loans and the sale of assets. However, such coping mechanisms, which would push income levels up to the World Bank threshold, were in very limited supply, particularly in Gaza.