"If the aim of the blockade policy was to weaken the Hamas administration, the public employment numbers suggest this has failed," a UNRWA spokesman said Tuesday as the UN marks Gaza's fifth year under intense Israeli siege.

Commenting on a report released by the UN agency charged with providing care and services for the one million refugees living in the Gaza Strip, on the fifth anniversary of the siege, spokesman Chris Gunness added "it has certainly been highly successful in punishing some of the poorest of the poor in the Middle East region."

According to UNRWA, wages in Gaza fell 34.5 per cent since the first half of 2006, while unemployment reached 45.2 percent in the second half of 2010.

"These are disturbing trends," Gunness said, "and the refugees, which make up two thirds of Gaza’s 1.5 million population were the worst hit in the period covered in this report. It is hard to understand the logic of a man-made policy which deliberately impoverishes so many and condemns hundreds of thousands of potentially productive people to a life of destitution."

On 14 June 2006, militants in the Gaza Strip captured an Israeli soldier patrolling its border. In retaliation for the capture of a soldier, Israeli forces entered the West Bank and abducted eight Hamas ministers and 21 party lawmakers from their homes and offices. Imports and exports into and out of Gaza were scaled down to a fraction of normal levels in an attempt to pressure the ruling party Hamas to return the soldier.

Hamas, negotiating on behalf of the factions which captured the soldier, are demanding the release of 1,000 Palestinian prisoners in return for his release.

Israel tightened the siege, restricting access to coastal fishing waters in October 2006, reducing the fishing limit from 20 nautical miles down to six. Then following Israel's offensive on Gaza in the winter of 2008-9, the fishing limit was reduced to three nautical miles, effectively quashing the industry.

Imports between 2006-2010 were restricted to a short list of goods, with reports suggesting calculations had been made to import only the minimum necessary food supplies to sustain the population. After an international aid flotilla sailed to Gaza in June 2010 and Israeli commandos shot and killed nine of the activists on board, world outcry against the siege prompted a slight easing, with more commercial goods permitted in.

Prohibitions on industrial goods and building materials remain, however, making reconstruction of the 6,000 homes destroyed during Israel's winter offensive impossible without intervention from international agencies.

Israel says materials used in construction of homes could be used to manufacture weapons.

A massive tunnel import industry grew in the southern Gaza Strip after the blockade was imposed, allowing building materials, cars foodstuffs and weapons to be brought into Gaza. The goods are too expensive for most Palestinians in the Strip to afford.

Exports of goods and produce from Gaza have effectively been stopped, with only a few hundred loads of strawberries and carnations having been exported to Europe under a Dutch government program since the imposition of the siege.

During the past five years, UNRWA noted in its report, that the private sector had been hit particularly hard in comparison with the public sector. While private businesses were forced to cut nearly 8,000 jobs in the second half of 2010, the Hamas dominated public sector grew by nearly three percent over the same period.

"Our research indicates that since 2007, Hamas has been able to increase public employment by at least one-fifth," said Gunness. "Even more striking, in what should have been a relatively good year for the Gaza private sector with the supposed easing of the blockade, the public sector generated 70% of all net job growth as between second-half 2009 and second-half 2010."

UNRWA has stated that it will continue to operate in the health and education sectors in Gaza, with some 213,000 children currently attending UNRWA run schools. However, the report stated that since the start of the blockade, the number of people living on less than one dollar a day has tripled to nearly 300,000 since the blockade was imposed.

"With many reconstruction projects still awaiting approval, the future looks bleak" Gunness said.