Is it permissible to continue working for a contractor who deals in the unlawful (haram), and in a living and working environment that encourages the unlawful (haram), given the difficulty of finding another job in the country?

If your current job is haram (forbidden) or involves haram elements, you must leave it immediately. "And whoever fears Allah - He will make for him a way out and will provide for him from where he does not expect." (Quran 65:2-3) And whoever gives up something for the sake of Allah, Allah will compensate him with something better. However, if the job is not forbidden, then there is no harm in continuing with it. The contractor's engagement in haram matters in other affairs does not affect your work, but you must enjoin good and forbid evil. If you fear fitna (temptation or discord), then leave the place.