Business

NEW YORK — Mid-sized and regional airlines in the US are suffering from a pilot shortage that could threaten the health of the broader US aviation industry.

Some regional carriers have trimmed about five per cent of their flights, cuts that have hit smaller airports, such as in Redding, California, or Erie, Pennsylvania.

The staffing crunch could also constrain traffic for larger companies like United Airlines and Delta Airlines that depend on the mid-sized companies to serve rural consumers and feed customers into their networks.

"It's becoming a crisis at some carriers, resulting in the cancellation of flights and other serious disruptions," said Patrick Smith, a pilot who runs "Ask the Pilot," an aviation blog.

Republic Airways, which operates flights for Delta, United and American Airlines, filed for bankruptcy protection last month, citing the labour crunch.

"We've attempted to restructure the obligations on our out-of-favour aircraft, made so by a nationwide pilot shortage, and to increase our revenues," said Bryan Bedford, chief executive officer of Republic Airways. 

"It's become clear that this process has reached an impasse and that any further delay would unnecessarily waste valuable resources of the enterprise," he added.

Things at Republic came to a head last July, when the airline acknowledged cutting 4 per cent of its flights due to a dearth of pilots. 

Delta subsequently filed suit against Republic, alleging breach of contract.

Mesa Airlines and Silver Airways, two regional carriers that have been associated with the problem, said this week that their cancelled flights were due to bad weather, not a labour shortage.

Pay gap       

Aviation industry insiders cite a number of factors for the drop-off in pilots: longer working hours, contentious relations with management, fewer job protections and industry turnover with the expected retirement of some 18,000 pilots through 2022. 

But the biggest factor is compensation. 

Regional carriers pay pilots an annual average of  $27,350, according to Paul Ryder, ALPA Resource Coordinator. That compares with an annual salary of $103,390 at large airlines, according to US Labour Department data.

Aspiring pilots must pay between $150,000 to $200,00 to obtain their license, Ryder remarked.

Three years ago, US regulators stiffened the requirements on pilots following a 2009 Colgan Air crash near Buffalo, New York, that killed 49 people.

Commercial pilots must now have 1,500 hours of flight time before qualifying for their pilot's license, compared with just 250 prior to the rule shift.

Adding to that burden is a shift in the broader aviation industry as regional flying has grown. Up-and-coming pilots once viewed the regional carriers as a stepping-stone to a job with a bigger company, said Smith.

"Today, the regional sector accounts for half or more of all flying, and pilots are realising that a job with a regional often means an entire... career with a regional," Smith added. 

"Fewer pilots are willing to commit hundreds of thousands of dollars into their training and education for a career with such a limited return on investment, in what has historically been a very unstable industry," he elaborated.

Steps taken by some regional carriers include boosting compensation, such as offering a bonus to qualified pilots of $80,000 spread out over four years, said industry consultant Kit Darby.

Companies are also granting bonuses of $500, $1,000 or $1,500 for pilot referrals, Darby added.  

"An airline that wants to be able to recruit new pilots and to retain its current pilots needs to offer reasonable compensation, fair worklife balance and some career path with stability," said pilot Ryder.

"An airline that does not offer that typically has seen challenges in attracting employees," he added.

STRASBOURG, France — The European Commission on Tuesday said France, Italy and Portugal were in violation of European Union (EU) rules on public spending and would be more closely monitored by Brussels.

In a regular report on the national budgets in EU member states, the commission pointed to France's "large public debt coupled with deteriorated productivity growth".

It also singled out Italy's "high government debt" along with a worrying level of long-term unemployment that "weighs on growth prospects". 

In total, the public spending in five countries, including Bulgaria and Croatia, were found to be experiencing "excessive imbalances" in the EU.

Without noted improvements, these countries risk the unprecedented step of punitive action known as the "corrective arm" by the EU that could include penalties.

"Countries in excessive imbalances can be put in corrective arm at any moment," Commission Vice President Valdis Dombrovskis warned at a news briefing.

Seven other countries, including Germany for its "excess savings and subdued investment", were also found to be in violation of EU rules, but to a lesser degree.

EU rules set the limit on public deficits at 3 per cent of an economy's total annual output. The threshold for total public debt is 60 per cent of output.

European Commission economic forecasts recently showed that France, Italy, Spain and Portugal are in breach of or will break EU deficit reduction rules unless they change policies.

The commission latest forecasts showed that France, which has a deadline to cut its headline budget gap to 2.8 per cent in 2017 will instead have a deficit of 3.2 per cent next year, unless it takes action.

In structural terms, France was asked by EU finance ministers to reduce the deficit by 0.5 per cent of the gross domestic product (GDP) in 2015, 0.8 per cent in 2016 and 0.9 per cent in 2017. But the commission forecasts showed the cut last year was only 0.2 per cent.

The reduction in the structural deficit this year in France will be only 0.4 per cent, half of what is required, and the shortfall will actually rise 0.2 per cent next year, according to the commission's forecasts.

The third-biggest economy Italy, while safely below 3 per cent with its headline deficit, will see an increase in its structural gap to 1.7 per cent of the GDP this year from 1 per cent in 2015, rather than a 0.5 per cent fall as required by EU rules.

The Italian structural deficit is then to ease only to 1.4 per cent in 2017, again below the minimum required annual reduction of 0.5 per cent.

Spain, the eurozone's fourth largest economy and still without a government after inconclusive elections in December, was asked to cut its headline deficit to 4.2 per cent in 2015. But the commission's forecasts showed it missed that target, with a 4.8 per cent gap.

Madrid was to take the deficit down to 2.8 per cent this year, but unless policies change it will end up with a 3.6 per cent shortfall, the commission projected.

In structural terms, Spain's deficit has risen since 2014 rather than falling, the commission said.

Portugal is also in trouble, because it was supposed to cuts its headline deficit to 2.5 per cent last year, but instead ended up with a 4.2 per cent gap.

Without policy changes, it will not bring its deficit below 3 per cent this year either and its structural deficit is also rising sharply, rather than falling as it should.

The commission last month estimated eurozone economic growth will slightly accelerate this year and next, but the pace will be slower in 2016 than previously forecast because of increased global risks.

The GDP of the 19-country single currency bloc is expected to expand by 1.7 per cent this year from 1.6 per cent in 2015. The recovery will gain speed in 2017 with economic expansion of 1.9 per cent, the EU executive said in its winter economic forecasts.

The growth estimate for this year is a slight downward revision of the 1.8 per cent seen in the last set of forecasts in November. The 2017 figure was unchanged.

External factors are seen as the main risks to the eurozone economy that will continue to grow mostly because of domestic consumption.

"Europe's moderate growth is facing increasing headwinds, from slower growth in emerging markets such as China, to weak global trade and geopolitical tensions in Europe's neighbourhood," Dombrovskis said in a statement.

Low oil prices, cheap credit and the weak euro will continue to boost eurozone growth, but will be offset by a "disorderly adjustment" in China and the possibility of higher interest rates in the United States.

All national economies of the eurozone are expected to grow this year, with the exception of Greece where GDP will drop by 0.7 per cent, albeit a lesser decline that the 1.3 per cent decrease forecast by the commission in November.

The Greek economy will return to growth in 2017 with an expected 2.7 per cent expansion. 

"These are the good signs that some stabilisation is already happening," EU's Economics Commissioner Pierre Moscovici told a news conference, warning however against complacency in the reform agenda.

Germany's economy, the eurozone's largest, will grow 1.8 per cent this year and next, compared with November forecasts of 1.9 per cent. It also will continue recording large current account surpluses, exceeding the 6 per cent limit recommended by the EU institutions.

Growth forecasts in 2016 for France and Italy, the second and third largest economies of the eurozone, were also revised slightly downward to respectively 1.3 and 1.4 per cent.

Ireland is set to post the highest growth among all 28 EU countries, with an estimated expansion of the economy of 4.5 per cent in 2016. The forecast marks a slowdown from the 6.9 per cent growth estimated in 2015, but was welcomed by the commission as it averts fear of possible bubbles, Moscovici said.

WASHINGTON — US economists are growing worried about the Federal Reserve’s (Fed) tightening policy, saying it is dampening economic growth, a key survey showed Monday.

The National Association for Business Economics (NABE) said its semiannual survey of members found a large majority of business economists expect the Fed to continue raising the benchmark federal funds rate in 2016, following December’s hike from near zero.

But economists have lowered their estimate of the number of hikes this year to two or less, down from the four seen in the August survey, reflecting the cooling economy, NABE added.

“Tight fiscal policy is increasingly cited as a significant restriction on current economic growth,” said Lisa Emsbo-Mattingly, NABE president and director of research at Fidelity Investments, in a statement.

“A narrow plurality of panellists, 41 per cent, now characterises current fiscal policy as ‘too restrictive’ compared to the 29 per cent who held this view last August,” she added.

Meanwhile, 38 per cent judge fiscal policy as “about right,” down from 41 per cent. But almost 31 per cent say policy is “too stimulative”. 

Even so, about three-quarters of the 252 economists surveyed expect the Fed funds rate, now at 0.25-0.50 per cent, to be raised at most two times this year, which would keep the range at 0.75-1 per cent or less by year-end.

The majority of economists supported the Fed’s view that inflation, would be near the Fed’s 2 per cent target in five years. 

Weighing in to a hot topic in the US presidential race, the NABE economists showed wide support for welcoming highly skilled immigrants. A large majority, 79 per cent, said the federal government should remove restrictions for this group.

The Bank of Japan’s (BoJ) decision in January to use negative interest rates to avoid deflation and boost Japanese economic activity drew a lukewarm response: 53 per cent of respondents believed the BoJ action would not significantly impact growth, and only a third expected some positive impact.

And as Britain heads to a June referendum on whether to exit the European Union, a large majority (74 per cent) of respondents predicted there would be no so-called “Brexit” before the end of 2017, while just 10 per cent saw Britain dropping out of the 28-nation bloc.

Fed Vice Chair Fischer says weak productivity major problem

Speaking at NABE, Fed Vice Chairman Stanley Fischer said the rate of productivity growth has fallen dramatically in the United States and other countries over the last 20 years, and economists are unsure what to do about it.

Fischer said “there are few issues more important for the future of our economy” than boosting productivity, the amount of output per hour of work.

Productivity grew at a solid 3 per cent from 1952 to 1973, then slowed to 2.1 per cent from 1974 to 2007, he indicated. From 2008 to 2015, productivity growth in the United States fell to an average rate of just 1.2 per cent.

Fischer said this retreat will likely have “severe consequences” on the nation. But economists are unsure of why the slowdown has occurred or what will happen to productivity in the future.

Fischer did not comment on the current state of the economy or what the Fed might do next with interest rates.

The Fed in December raised its key rate for the first time in nearly a decade, boosting it by a quarter point to a range of 0.25 per cent to 0.5 per cent. Policymakers did not raise rates at its January meeting, and officials are expected to leave rates unchanged when they meet again on March 15-16.

Speaking to the annual Washington conference of the Institute of International Bankers, Fed Governor Lael Brainard said the central bank needs to be patient in its plans for tightening monetary policy.

Brainard, a known “dove” on the policy-setting Federal Open Market Committee (FOMC), warned eight days before the next FOMC meeting that, given the slow global economy and the absence of inflationary pressures, the Fed needs to be prudent after having raised its benchmark interest rate in December.

While the US economy has been resilient, she said, “we should not take the strength in the US labour market and consumption for granted.”

“Given weak and decelerating foreign demand, it is critical to carefully protect and preserve the progress we have made here at home through prudent adjustments to the policy path,” Brainard added.

She noted that financial market conditions have already tightened significantly despite the mere quarter-point increase in the federal funds rate in December, 

That, combined with softening expectations for inflation in the market, risk pulling both growth and inflation lower, against the goals of FOMC policy.

“From a risk-management perspective, this argues for patience as the outlook becomes clearer,” she said.

In December, when it undertook the first increase to the benchmark short-term rate in more than nine years, the FOMC projected up to four interest rate hikes this year to take the rate to 1.25-1.5 per cent by year end.

But the sluggish global economy, the crash of the oil market, and especially the extent of China’s downturn, are reasons to move more slowly, Brainard suggested.

“Inflation has persistently underperformed relative to our target,” she noted. 

“We should be cautious in assessing that a tightening labour market will soon move inflation back to 2 per cent. We should verify that this is, in fact, taking place,” she added.

Separately, US President Barack Obama on Monday defended his efforts to rein in Wall Street, telling Americans that his administration cracked down effectively on banks and trading firms after the financial crisis of 2007-2009.

Obama, now in the last 10 months of his presidency, met at the White House with Fed Chair Janet Yellen and other top regulators to talk about their progress implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act he signed into law in 2010.

He railed against rhetoric in the November 8 presidential election campaign suggesting that Dodd-Frank failed to work.

“I want to emphasise this because it is popular in the media and the political discourse, both on the left and the right, to suggest that the crisis happened and nothing changed. That is not true,” Obama told reporters after the meeting.

On the left, Democratic presidential contender Bernie Sanders has said Wall Street regulations have not gone far enough. He wants to break up big banks and has criticised his rival Hillary Clinton for being too close to Wall Street.

On the right, Republicans have complained that Dodd-Frank favoured big banks and hurt the ability of small banks to make loans.

Obama said regulators appear set by the end of the year to have achieved most of the goals he set out for the financial system in 2008, when he first took office, although he noted there was still work to do on rules for hedge funds and asset managers in what he called the “shadow banking system”.

“One of our projects is to make sure that we are covering some of those potential gaps,” he added. “We may need at some point help from Congress to do that.”

Regulators also need to complete rules on executive compensation to make sure Wall Street is “less incentivised to take big reckless risks that could end up harming our financial sector”, he continued.

Obama told reporters the Republican-controlled Congress has tried to weaken regulations established after the financial crisis and “starve” regulators with budget cuts.

“Whether you are a Democrat or a Republican or a Tea Party member or a socialist, if you are concerned about making sure that Wall Street is doing the right thing, check to make sure that your member of Congress is not trying to cut the budgets of these various agencies,” Obama said.

LONDON — With 45 per cent of senior management positions held by women, Russia has once again topped a ranking of countries with the highest per centage of women in senior business roles, followed by the Philippines and Lithuania, a report published on Tuesday said.

Japan, where only 7 per cent of senior leadership roles are held by women, remained at the bottom of the list. Germany and India ranked slightly higher, with 15 per cent and 16 per cent of women in senior management, respectively.

Globally, only a quarter of senior management positions are held by women, up from 22 per cent a year before, according to "Women in Business" published by the US-based audit and tax firm Grant Thornton.

The number of businesses with no women in senior management has increased to 33 per cent from 32 per cent in 2015, the report, which surveyed 5,520 businesses in 36 countries, indicated.

"Companies across developed nations have talked the talk on diversity in leadership for long enough," Francesca Lagerberg, global leader for tax services at Grant Thornton International said in a statement. "It's time to put their promises into practice and deliver results."

With more than a third of senior roles in the region held by women, eastern European countries, among them Estonia, Latvia and Poland, topped the diversity rankings.

Meanwhile, 39 per cent of businesses in Group of 7 countries (Canada, Germany, Italy, France, Japan, Britain and the United States) had no women in senior management positions.

"Despite considerable efforts by governments and campaigners across the world's best-developed economies to ensure best practice they continue to lag behind emerging markets in [the diversity] area," Lagerberg said.

"This poor performance seems to be at least partly a result of entrenched societal norms. In the UK and US in particular, there are still plentiful examples of a 'command and control' approach to leadership which is not necessarily attractive to women," she added.

Eastern European countries owed some of their diversity to the legacy of the communism and its principles on equality, the report concluded.

Separately, a survey published on Tuesday indicated that if you're a new mother in Britain returning to work after having a baby, almost half of your colleagues will think that you've become less committed to your job.

However, if you're a new father, a baby comes with a bonus, as many of your peers will likely think your commitment to work has actually increased, said the poll by the Fawcett Society, a campaign group promoting women's rights in the labour market.

The news gets even worse for women who become mothers before the age of 33, who, according to analysis by the Trades Union Congress, Britain's largest union group — earn 15 per cent less than their female colleagues who haven't had children.

"The motherhood penalty and daddy bonus are still a strong feature of our workplaces," Sam Smethers, Fawcett Society's chief executive, said in a statement. "This drives inequality and forces women and men into traditional male breadwinner, female carer roles."

According to the Fawcett Society survey, 46 per cent of people in Britain believe women become less committed to their job after having a baby, compared to 11 per cent who think the same is true for men.

Meanwhile, 29 per cent of people believe new fathers become more committed to work, compared to just 8 per cent who believe new mothers become more committed.

The poll showed discrepancies in how men and women see their share of childcare, with men almost twice as likely as women to believe that tasks such as making sure children do their homework or washing children's clothes were shared equally.

"The lack of flexibility and pressure on dads at work means women are still doing the bulk of the caring and the work around childcare," Smethers said. "[...] until we start to see a more equal sharing of care we won't achieve equality at work and we won't close the pay gap".

The survey also showed that both men and women lie to their bosses in order to spend time caring for their children.

Four in 10 fathers said they were not getting enough leave time to care for their children and 38 per cent said they resorted to lying to their bosses in order to spend time with their kids, compared to 28 per cent of women who said they lied.

AMMAN — Jordan ranked second among Arab countries in the 2015 Economic Freedoms report issued by the Canada-based Fraser Institute in December 2015. The Kingdom also ranked seventh worldwide among 157 countries in the Economic Freedoms Index the institute issued in September 2015.

The United Arab Emirates topped Arab countries with 8.2 points, and Jordan achieved 8.1 points in the report based on data from 2013. The index of obtaining secure monetary reserve and trade freedom index topped several strengths in the national economy.

In preparing the report, the institute depended on 37 main indexes in main fields such as the government size, legal structures, securing investors’ rights, ease of receiving loans, international trade freedom, work organisation and banking policy.

RIYADH/MANILA — Foreign governments are pressing authorities and executives in Saudi Arabia to ensure that local construction firms make delayed salary payments to thousands of workers, a sign of pressure on the kingdom's economy due to low oil prices.

Since late last year, the Saudi government has responded to shrinking oil revenues by clamping down on state spending to curb a budget deficit running at about $100 billion annually.

This has squeezed construction firms in the kingdom; as they have received less money from the government, they have in some cases delayed paying wages to thousands of their foreign workers. Some employees have not been paid for months.

About 10 million people, largely from south Asia, southeast Asia and other parts of the Mideast, work in Saudi Arabia. Most of them do low-paid jobs in sectors which Saudis spurn, such as construction, domestic service and retailing.

Countries taking up the cause of the unpaid include the Philippines. In Manila, Labour Secretary Rosalinda Baldoz told Reuters on Monday that the Philippine embassy in Riyadh was contacting Saudi authorities to resolve the issue.

Baldoz has assigned her official in charge of workers' welfare to tackle the issue. "I am deploying... a fact-finding mission headed by Undersecretary Ciriaco Lagunzad to meet with the workers, employers and competent authorities," she said.

In recent weeks, the French ambassador to Riyadh sent a letter to the chief executive of Saudi Oger, one of the country's biggest builders with about 38,000 employees, asking him to resolve the cases of French staff who had not been paid for four months, a diplomatic source said.

Bangladeshi diplomats said they had contacted major Saudi construction firms to discuss wages that had gone unpaid for over two months.

In a brief statement to Reuters, the Saudi labour ministry said all private sector companies were obliged to pay salaries on time and that it would impose sanctions against firms which were late. It did not elaborate, or comment on individual cases.

An executive at Oger said his company, like others, had been affected for several months "by the current circumstances which resulted in some delays in fulfilling our commitments to our employees".

Oger has adopted a recovery plan which will enable it to resume payments from March, the executive added, without giving financial details. He declined to be named because of the sensitivity of the issue.

The squeeze on the construction sector has become a major issue for the business community in the kingdom. Last month, Abdul Rahman Al Zamil, president of the Council of Saudi Chambers business association, publicly asked King Salman to ensure that the government paid the companies.

At some companies, including Oger, hundreds of unpaid foreign workers have halted work and staged public protests to demand their wages, industry sources said, rare in a country where demonstrations are prohibited.

Workers

Foreign workers flocked to the kingdom when oil prices were high and its economy boomed, but as the outlook has darkened since late last year, some companies, particularly in the construction sector, have begun cutting staff.

People with knowledge of the matter told Reuters last November that Saudi Binladin Group, another top building firm, planned to cut about 15,000 staff in one wave. Binladin did not reply to requests for comment.

Delayed payments to foreign workers, because of bureaucratic inefficiency and cash shortages, have long been an occasional feature of the construction industry in the Gulf.

But the Saudi spending clampdown since oil prices dropped has made the situation much worse. The finance ministry has cut advance payments to firms doing state building work, the government has awarded fewer contracts and its payments to companies for work already done have slowed.

In absolute terms, the state does not lack money to pay its debts; it still has nearly $600 billion in overseas assets. But austerity controls imposed on government departments have slowed approvals for payments and their disbursement.

The government has not disclosed a figure for the amount of money it owes the companies, but industry executives estimated privately that it could total hundreds of millions of dollars; one executive suggested at least several billion dollars.

Some executives said they had been informed by authorities that the government intended to pay its debts by the end of this month. Others were sceptical, however, saying such undertakings had been made and broken repeatedly in recent months.

According to documents seen by Reuters, representatives of unpaid workers, the Saudi labour ministry and Binladin, as well as a local police representative, reached an agreement designed to resolve pay disputes after workers staged public protests in Mecca earlier this year.

Under the deal, workers for a railway project handled by Binladin could stay with the company and get paid, leave the country with the money owed to them, or transfer to another company in Saudi Arabia and receive their money, the documents showed, without specifying when payments would be made. Binladin did not respond to requests for comment.

AMMAN — The Jordan Industrial Estate Company (JIEC) on Monday signed an investment agreement in the field of paper, carton and packing in the Muwaqqar Industrial Estate. The agreement, signed by JIEC Chief Executive Officer Jalal Dabai and Marwan and Mohammad Zalatemo, came after the company's announcement of incentives on land and building prices in the estate, according to a JIEC statement.

Dabai noted that JIEC's incentives target factories established out of the Kingdom's industrial estates to provide an investment attracting environment towards the industrial estates in Amman, Muwaqqar, Irbid, Karak and Mafrak. The incentives aimed at encouraging investments in the Muwaqqar and Hassan industrial estates by offering a 10 per cent discount on land values in the two estates. 

AMMAN — The Kingdom's exports of clothes in 2015 increased by 8.7 per cent, registering JD1.11 billion, compared to JD1.02 billion in 2014, Adel Tawileh, representative of the leather and textile industries at the Jordan Chamber of Industry, said on Monday.

He added the US market received 90 per cent of these products, under the free trade agreement signed between Jordan and the US.

The total investment value of the cloth sector in the Kingdom exceeds JD700 million, Tawileh elaborated, highlighting the value could be increased if the rules of origin are facilitated under the Jordanian-EU agreement, to allow the use of Chinese and southeastern Asian countries fabrics.

There are some 1,300 facilities working in the cloth sector in the Kingdom, which provides some 65,000 direct and indirect jobs, in addition to 5,000 jobs for supporting professions, he added.

GAZA CITY, Palestinian Territories — Standing by skips full of clothes, vendors call out to bargain hunters scrambling for the not-so-latest styles in the Gaza Strip.

In the Palestinian enclave plagued by poverty and sky-high unemployment, and hit by a nearly decade-long Israeli blockade, the second-hand clothes market is booming.

Adidas jackets and Tommy Hilfiger shirts are among the brands being hawked in the narrow streets of the Fras flea market or at the open-air Yarmouk market.

There are some improbable items among the piles, including what appear to be used Israeli military uniforms, reflecting the entanglement of the two neighbouring peoples' lives despite the conflict.

Second-hand clothes even thrive in the shopping streets of the most affluent neighbourhoods, says Ahmed Rajab, who runs a shop selling used brand-name garments.

"I see a parade of people from all social classes," he says, helping youngsters looking for a hipster or casual look, and mothers who have come to dress their children or find a jacket for their office-worker husbands.

Before Israel imposed a blockade of the coastal Palestinian territory in 2006 "people would not have dared say they bought second-hand", he said. "Things have changed with the economic situation."

His stock comes from Israel and Europe.

Several times each month, his suppliers and those of his colleagues holding the rare crossing permits issued by Israel pass through the heavily-fortified border into the Zionist state.

There they buy used clothes by weight at 5,000 shekels ($1,250, 1,200 euros) a tonne, says Abu Alaa, a regular at Gaza City's Fras market.

Then the merchandise is trucked in bulk into Hamas-run Gaza, where it is sorted, washed and ironed.

"People no longer ask where it came from but how much it costs," says Hamza, 23, who has come to Ahmed Rajab to buy a grey and black cardigan to go with his grey pullover and sunglasses with black frames.

Hottest European labels       

Hamza says he buys almost solely second-hand.

"That goes for all my friends, boys and girls," he added in Rajab's shop. "We all come here because you can get the hottest European labels, which are impossible to find new in Gaza."

Prices are around 10 shekels for a shirt, 30 for a jacket and 40-50 shekels for designer jeans.

That is still too much for some.

The average monthly salary for Gazans in work is just $174, but nearly half are unemployed.

Nearly 40 per cent of the 1.8 million Palestinians crowded into the narrow strip on the shores of the Mediterranean live below the poverty line.

Before the blockade, tens of thousands of Gazan families lived off the incomes of relatives working in Israel but then draconian restrictions were imposed in 2006 after Hamas captured an Israeli soldier.

Israel further tightened controls a year later when Islamist movement Hamas consolidated its rule over Gaza.

Egypt's sole border with Gaza has also remained largely closed since 2013.

Vicious fighting between Hamas and secular rival Fatah in 2007 and three wars with Israel since 2008 deepened the strip's troubles.

For those on a threadbare budget, there are the street vendors of Fras or Yarmuk markets in Gaza City, where t-shirts and children's clothes change hands for as little as a shekel or two and other items are not much pricier.

"Two pairs of trousers for 15 shekels," a trader shouts. "Seven shekels a shirt."

Rami Jendiya comes to Yarmuk every weekend to outfit his family.

"In the stores you have jackets for 50 or 60 shekels," he says. "Here I can buy four for the same amount."  

Salah Al Qerem, 53, used to work in Israel.

When Israel revoked work permits for Gazans in 2006 he gave up his cabinet-making craft to take over his father's used clothing stall in Fras market.

Now he sells Israeli castoffs "of really good quality", he says.