# **_(ii) The Labor Market in Timor-Leste_**

12. **_(i) Labor Market data:_** Data on Timor-Leste in general, and on its labor markets in particular, are extremely weak and this hinders effective policy analysis and advice. The Timor Living Standards Survey (TLSS) of 2000 is considered the most reliable and comprehensive information, but reflects living standards and labor market conditions immediately following the end of Indonesian occupation, when major donor presence created specific labor market dynamics in Dili and to some extent beyond which were unlikely to reflect a longer-run equilibrium. Census data collected in 2004 are more recent, but naturally provide a much less comprehensive picture of living standards and employment patterns, and are yet to be analyzed at the unit record level.

13. Given the paucity of up-to-date labor market information, a survey of formal and informal urban enterprises was carried out in August-September 2004 in Dili, Baucau and Maliana, with financial support from the Danish Government and the World Bank, and with the endorsement of the then Secretariat of Labor and Solidarity (L&S), now the Ministry for Labor and Community Reinsertion. The objectives of the survey were to:

- Provide up-to-date information on some key elements of urban labor markets, including firm features and needs, worker characteristics, wages, and skills issues.  While the information gathered was limited, it is nonetheless considered useful in such as data-poor environment.

- Act as a resource for Government officials, Labor Boards, employers and unions, and other key stakeholders as they develop labor and employment policy.

- Inform the policy advice of the World Bank and other agencies on labor, employment and skills issues.

- Inform the design of future household/labor and enterprise surveys through identification of areas needing more detailed enquiry.

14. For all practical purposes, this was a survey of all formal enterprises (a census), which were the existing enterprises on the business register in the towns surveyed, and numbered 494.<sup>2</sup> In addition, a representative sample of 552 informal/household establishments was also surveyed, to understand their characteristics and role in employment generation. There were separate survey instruments for formal and informal enterprises, with a common core of questions. The details of the survey are provided in Annex 1 **.** This study reports the findings of the survey, also drawing on earlier work on wage policy and the training and vocational education (TVET) system in Timor Leste.<sup>3</sup> 15. **_(ii) Labor Market features_** : Timor-Leste is a primarily agrarian economy, dominated by self-employed workers. Below is a short overview of labor market features in Timor Leste, based mainly on the TLSS. The main LM characteristics are:

- a. _Unemployment Rates_ **:** Timor-Leste has high urban unemployment (ILO definition) with workers in Dili/Baucau facing the highest unemployment rates at 20 percent. In rural areas, unemployment is low, but underemployment is suspected to be high, and productivity low.

> 2 The business register contained significantly more enterprises, but many were found to be no longer in existence by survey enumerators.

> 3 Das, Maitreyi (2004) on wage policy and Abrahart (2003a and 2003b) on TVET.

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