ILO analysis finds Palestinian income dynamics require more inclusive social protection approaches

New analysis shows that income poverty in the Occupied Palestinian Territory is not a static concept, with nearly half of the original 'poor' households no longer being classified as such within a 5-year period.

Press release | 08 May 2023
Jerusalem (ILO News) – A recent analysis by the International Labour Organization (ILO) in the Occupied Palestinian Territory (OPT) found that income poverty is not a static concept, and households constantly move in and out of poverty. This study has been produced in cooperation with the Palestinian Central Bureau of Statistics, enabling actors to better understand which groups may be most vulnerable and therefore most likely to need assistance after a crisis. Finally, the study was conducted as part of a Joint Program with WFP funded by the Joint SDG Fund.

The analysis shows that income poverty is not a static concept, with nearly half of the original 'poor' households no longer being classified as such within a 5-year period. From 2013 to 2018, nearly half of the original ‘poor’ households were no longer poor, with 40% of the ‘poor’ households in the OPT experiencing transient poverty, moving up and down income classes over time. In the West Bank, only 16% of households that were poor in 2013 remained poor in 2018. However, the analysis found that 52% of households that rose out of poverty in 2014 fell back into poverty by 2018. Furthermore, the study highlights the need for both support for those currently experiencing poverty, and protection for vulnerable and middle-class households to prevent them from falling into poverty in the future.

The analysis identified three main factors causing downward mobility: demographic changes, labour market fluctuations, and shocks. Downward mobility only increases with new shocks. On average, vulnerable households that fall into poverty experience a 42% fall in income, while poor households that rise to the vulnerable class experience a 101% rise in income.

Implications for the design of Social Protection systems

The analysis reveals that social protection measures can help protect against structural vulnerabilities and prevent downward mobility, whilst supporting the upward mobility of poor households. In fact, it is more cost-efficient to prevent households from falling into income poverty than to lift them out of it.

“Better understanding the dynamic nature of poverty and vulnerability is essential for the design of effective and inclusive social protection systems.” Says Luca Pellerano, Senior Social Protection Specialist with ILO “Because of large and frequent movements across income classes targeting is a very arduous task in OPT, and one that creates a false illusion of precision.”

The analysis shows that social protection mechanisms that focus only on chronic income poverty miss the target by design. Social protection systems and programmes need to respond in real-time to the dynamic nature of poverty. This implies the need for a strong data infrastructure and administrative capacity to quickly adapt to changing circumstances, but also programme design that extends support beyond the extreme poor and prevents households from falling into poverty.

Extending social protection coverage is necessary in both the West Bank and the Gaza Strip. “The study highlights the differences between the two areas, with the West Bank experiencing significant upward mobility and the need for social protection to protect the positive gains of the middle classes, while the Gaza Strip has seen poverty increase significantly, with social protection necessary to prevent the rapid dwindling of the middle class”, says Tareq Haq, consultant for the ILO.

Developing social protection approaches that prevent sliding into poverty as opposed to only responding to poverty is central to the advancement of a social protection floor agenda in OPT on the road to Universal Social Protection (see report). It requires addressing lifecycle vulnerabilities and combining social assistance and social insurance approaches.

Representative Manal Abu Ramadan from the Ministry of Social Development explains that “the development of an inclusive social protection system is a at the core of the Social Development Strategy of the Government of Palestine. The Ministry is committed to implementing life-cycle social allowances for older persons and persons with disabilities in Palestine. Addressing life-cycle vulnerabilities is critical to tackle poverty in the sustainable way, and not only in a temporary way.”

The findings of this new also assessment reinforce the conclusions of the analysis of targeting effectiveness of the Palestinian National Cash Transfer Program (PNCTP) included in a recent ILO report “Targeting by proxy” .
Data Numbers:
• Over 5 years, nearly half of the original ‘poor’ households were no longer poor.
• 52% of households that rose out of poverty in 2014 fell back into poverty by 2018.
• On average, vulnerable households that fall into poverty experience a 42% fall in income, while poor households that rise to the vulnerable class experience a 101% rise in income.

For more information, please contact:
International Labour Organisation
Route des Morillons 4
CH-1211 Geneva 22
Switzerland
Tareq Abu El Haj, Senior Consultant
Charis Reid, ILO Social Protection Officer, OPT
Momin Badarna, ILO Social Protection Coordinator, OPT
Luca Pellerano, ILO Social Protection Specialist, ROAS

T : +972 2 6260212
E : reid@ilo.org