Palestinian unemployment has risen by more than 25% following a stalled peace process, high tensions and the effects of last year’s war in Gaza, according to the International Labour Organization (ILO).

The ILO’s annual report on the situation of workers of the occupied Arab territories (the West Bank and Gaza Strip) found that the total number of unemployed Palestinians soared by more than a quarter in 2014, as compared with 2013, to reach 338,300.

The unemployment rate for Gaza was more than double that of the West Bank.

The employment situation was particularly dire for young people, with almost 40% of young men and 63% of young women being unemployed.

About three-quarters of the Palestinian population is aged 30 or under.

ILO Director-General Guy Ryder warns that “the combined weight of the continued occupation and the settlements does not permit the development of a viable, productive Palestinian economy, which could provide sufficient opportunities in terms of decent work. If current trends continue, the scope for such opportunities will shrink further”.

The report will be submitted to the ILO’s International Labour Conference, which opens in Geneva on 1 June.

The Director-General underlines that the peace process is in a state of suspension, and the international community should assist the parties directly concerned to resume it.

According to Guy Ryder, suspending the search for a two-state solution could have a “serious and possibly devastating effect on the action to achieve improvements in the employment and livelihoods of Palestinian women and men.

” He also says that “the ultimate logic of the institutions and laws that have been, and are being, developed is that they would serve as the infrastructure of a sovereign state.”

The report documents the latest developments in the building up of Palestinian institutions and especially social and labour-related processes for social dialogue, gender equality, social security and vocational education and training. It reiterates that these institutions need to be able to function fully, in practice, so that the stakeholders both benefit from them and also acquire and maintain the practice of using them.

The report warns of a downward spiral, which can be produced by consistently bleak employment and income prospects.

It concludes that currently there is a feeling that the space for development of the Palestinian society, and ultimately for a sovereign Palestinian state, continues to diminish. It also states that any new negotiations will immediately face questions of employment and income security as well as social and labour rights of the workers of the occupied Arab territories.