The Palestinian Authority's (PA) spending on the public sector wage bill has increased significantly over the years, despite reform efforts, and is higher than wage spending in all comparator countries. Based on this report's findings, the main driver of wage bill growth for the PA has been the increase in salaries of public employees, through the channel of allowances, rather than growth in employment itself. Notably, the ministries of health and education represent the largest share of wage bill spending and they have also seen the largest salary increases over time, most of which have been in the form of allowances. In terms of territorial distribution, the West Bank has been responsible for a larger share of wage bill growth compared to Gaza. If the PA does not address the core drivers of wage spending, its wage bill is likely to become even more fiscally unaffordable. World Bank simulations show that reforms that are based on a hybrid approach and that address both employment and wage growth can result in better outcomes as they can deliver significant fiscal savings for the PA. This report has focused mainly on key drivers of wage bill and employment growth across the public sector and has provided related recommendations. However, the team acknowledges that the PA is rightly trying to grapple with issues surrounding furloughed employees in Gaza specifically. Further analysis would need to be carried out on this issue. The World Bank team stands ready to provide further support in this area as well as on all issues described in earlier sections of this report.