Gaza's unemployment rate was among the world's highest, at 45.2% in late 2010, the UN has found, as Israel's blockade of the territory enters its fifth year.

Real wages meanwhile fell by more than a third, the UN Relief and Works Agency for Palestine Refugees (UNRWA) said.

Its report says that private businesses have been hardest hit by the continuing ban on virtually all exports.

Israel tightened sanctions on Gaza in 2006 after militants captured Israeli soldier Gilad Shalit.

The blockade was tightened again a year later when Hamas ousted rival Palestinian organisation Fatah from the territory.
'Boost to Hamas'

UNRWA spokesman Chris Gunness said of the report in a statement: "These are disturbing trends and the refugees, who make up two-thirds of Gaza's 1.5 million population, were the worst hit."

The unemployment figure, for the second half of 2010, was a slight improvement on the 45.7% jobless rate during the same period in 2009.
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At the scene
image of Jon Donnison Jon Donnison BBC News

One of the things you notice in Gaza is the tremendous number of people just sitting around apparently with time on their hands - smoking, chatting, shading themselves from the June sun.

This week I met a young man, Rami, a graduate with a degree and two masters degrees but still with no job. By no means a supporter of Hamas, he told me had no reason for optimism.

Israel imposed the blockade to weaken and put pressure on Hamas, which it calls a terror organisation. But as the blockade enters its fifth year, one of the key findings of this UN report is that the Hamas-run public sector is one of the only areas of the economy that is growing.

Hamas employs tens of thousands of people here. Private businesses have largely been crippled by the ban on virtually all exports and the fact that Gazans just don't have the money to spend.

But it was an increase from the first half of 2010, when a temporary building boom boosted jobs.

The UN report says while private businesses have suffered most, the Hamas-run public sector is one of the few areas where there has been economic growth, with the government employing tens of thousands of people.

Mr Gunness said the research had found that since 2007, Hamas had been able to increase public employment by at least one fifth.

"If the aim of the blockade policy was to weaken the Hamas administration, the public employment numbers suggest this has failed," he added.
'Accept Israel'

Israel says the measures against Gaza are necessary to stop weapons smuggling and to put pressure on Hamas, but the UN insists the restrictions amount to collective punishment of Gaza's population.

The Israeli foreign ministry spokesman, Yigal Palmor, says Israel is not against Hamas improving Gaza's economy or running the territory, but wants them to recognise Israel.
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Hamas insists on remaining committed only to an all-out war, and that is the systemic explanation of what is happening in Gaza”

Yigal Palmor Israeli foreign ministry spokesman

"We are totally in favour of Hamas accepting the international community's pre-conditions to become an interlocutor," he told the BBC World Service's World Today programme.

"If they only accepted that - surely that's not too much to ask, to recognise Israel, and to agree to negotiate with Israel - then Hamas would be accepted by Israel too as an interlocutor. And that would certainly immediately alleviate the plight of Gaza.

"But Hamas insists on remaining committed only to an all-out war, and that is the systemic explanation of what is happening in Gaza."

The restrictions was eased by Israel last year in response to international pressure, after nine Turkish activists were killed in clashes with Israeli troops who boarded their aid flotilla which was trying to break the blockade.

Restrictions at Gaza's border with Egypt have been eased since the ousting of Egyptian President Hosni Mubarak this year.

A change of policy by Cairo has seen the southern border crossing at Rafah opened daily for civilian traffic, but not for trade.

Although Hamas won Palestinian legislative elections in January 2006, it refuses to recognise Israel or to renounce violence and is designated in the West as a terror organisation.

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