dominant employment type. The smallest firms are typically in the informal sector and constitute a survival strategy for the poorest in many developing countries.

- f. _Skill Levels_ :  Timor-Leste has a shortage of skilled workers, as proxied by average years of schooling, which in 2001 was 4.62 years. Only 4.25 percent of the TLSS sample had attended university.  This has a bearing on both productivity and the potential of the country to attract foreign investment.  This is borne out by the results of the present survey as well.

- g. _Labor laws and growth of collective bargaining_ **:** Unions and legal institutions in TimorLeste are in a formative phase and rely on support from their Australian counterparts, the ILO and other global umbrella organizations.  The unions get their legal standing from the Labor Code.  The law permits workers to form and join worker organizations without prior authorization. However, attempts to organize workers generally have been slowed by inexperience and a lack of organizational skills.  The Labor Code also provides for a maximum workweek and overtime, minimum standards of worker health and safety, days off, and other standard benefits.  The law treats all workers, legal and illegal, the same in terms of wages and working conditions.  As required by the Labor Code, the Government nominated members to the National Labor Board, the Labor Relations Board, and the Minimum Wage Board. These boards begun work in 2004 and are receiving training.

# **2.  Findings of the Urban Enterprises Survey 2004**

16. As outlined above, in order to address the gaps in knowledge about the urban labor market and investment climate, during August-September 2004, a survey of 487 formal and 552 informal establishments was fielded in Dili, Baucau and Maliana districts. The survey was administered to the manager or owner of the enterprise, whoever was available. The main aim of the survey was to get information on size, dynamism and characteristics of the enterprises, wages, wage setting, barriers to growth, and their relationship to jobs and skills in Timor Leste. In addition, the Government as well as key stakeholders such as trade unions, employers, researchers and donors were keen to get information on existing skills of workers, the demand of further skills development and the importance of existing labor market institutions and laws.

17. The survey asked questions on sector and place of operation, number of workers employed in types of jobs, annual turnover source of startup capital, growth in employment over time, hiring practices, training provided, needs of employers in terms of trained employees, social protection provided to employees, and some information on wages. Also, the survey asked enterprises about the potential impact of a minimum wage if it were enforced. Timor-Leste is currently considering the legislation of a MW and there is some controversy, as to whether this would adversely affect employment. The survey provides important information about the potential impact of such a MW.

18. In the absence of basic information on enterprises and the labor market, the survey is a useful step. The findings are presented in the following sections. However, it also had some important limitations, due to which it provides at best a “quick and dirty” understanding of the urban labor market, and which imply important caveats on the analysis, including:

- The survey was conducted over a short period, and thus is subject to issues of seasonality.

- • Since the survey was intended to elicit responses from employees about their enterprises, a large number of questions were perception based.  These introduce subjectivity, which

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