Beyond the Unemployment Rate: Timor-Leste’s Real Jobs Challenge
Autór : Tendy Gunawan husi International Labour Organization (ILO)
This August marks two and half years since I arrived in Timor-Leste. Despite the country’s economic challenges, what stands out most is the warmth and resilience of its people. People are always willing to help, wherever, whenever they can, remarkably optimistic despite the challenges they face.
Yet beneath this welcoming spirit lies a quieter reality: for many Timorese, earning a living is a daily struggle. In Dili, street vendors line the roads. Men carry chickens or piglets balanced on wooden poles across their shoulders. Others push heavy carts through the midday heat selling vegetables and coconuts. Women sit outside supermarkets selling fresh produce, while elderly women patiently offer bottles of honey sealed with corn cobs. These are not isolated scenes—they are the livelihoods of thousands of families. In the informal economy.
According to the Timor-Leste Labour Force Survey 2021, 77 per cent of all employment is informal, reflecting the large extent to which livelihoods depend on economic activities outside formal labour arrangements. Of the remaining 23 per cent who do have formal jobs, the government is by far the largest formal employer with eight out of ten formal workers employed by the state. This reveals a labour market with limited pathways to stable, productive employment.
Every year, thousands young people enter the labour market. Yet the challenge extends beyond job creation alone. In 2022, Timor-Leste’s labour force participation rate in stood at only around 36 per cent. In other words, nearly two-thirds of the working-age people – around 562,000 people out of 809,000 – were not actively participating in the labour market. Women are disproportionately affected, with labour force participation around 20% lower than that of men.
These figures tell an important story. The challenge is not only unemployment; it is also the large number of people who are disconnected from the labour market altogether. Many have stopped looking for work because suitable opportunities simply do not exist. Others remain engaged in low-productivity informal work because they have few realistic alternatives. Against this backdrop, it is perhaps unsurprising that many young Timorese increasingly see overseas employment as their best opportunity for a better future.
Through my work in Timor-Leste, I have met many talented and motivated young people who have chosen this path. One was an energetic and articulate teacher at an agricultural school whose student enrolment had been declining. Today, he is working in Australia under a seasonal worker programme. Another was a gym trainer in his thirties who also chose seasonal work abroad.
These stories are no longer exceptional – they are the norm. Young people entering the labour market not only compete with their peers but also with older workers who remain underemployed, trapped in low-productivity, low-income jobs, or jobs that they do not want to do.
I have met many bright young Timorese overseas graduates who have simply given up looking for jobs that match their education background. The pressing question is whether the country’s talented young people can find meaningful opportunities that allow them to contribute their skills at home. When teachers, trainers and university graduates increasingly see migration as their best option, the country risks losing not only workers but also the human capital needed to drive its future development. Creating more jobs is essential, but the conversation must go beyond numbers. Timor-Leste needs a growing private sector capable of creating productive, decent work, alongside investments in education, skills and entrepreneurship that connect young people with real opportunities. Otherwise, many of its brightest minds will continue to see their future not in Timor-Leste, but overseas.
At first glance, Timor-Leste’s unemployment rate appears relatively low. Over the past decade it has averages around 3 to 4 per cent falling to around 2.9 per cent in 2022. On the surface, this figure suggests that unemployment is not a major concern. But this headline tells only part of the story.
Under International Labour Statistics, a person is defined as unemployed only if they are without work, have actively searched for employment during the previous four weeks, and are available to start work immediately. Anyone who has stopped looking for jobs, is waiting for overseas work opportunities without any contract, or is otherwise unavailable for work are counted as unemployed and statistically classified as being outside the labour force.
This distinction is critical to understanding the true scale of the challenge at hand. In Timor-Leste, the number of working-age people outside the labour force is more than twice the number who are economically active. Many young people are neither employed nor actively looking for work. Some are waiting, often for months or years, for overseas employment opportunities that may never materialise. Others have become discouraged after repeated unsuccessful job searches. Even among those who are employed, many are underemployed—working only a few hours, earning low incomes, or employed in jobs that make little use of their education, skills and potential.
The Government of Timor-Leste faces a threefold task in the years ahead. It must create jobs for the unemployed, encourage those outside the labour force participate again, and improve the quality and productivity of jobs for the hundreds of thousands that are currently working but struggling to make a decent living.
There are no quick fixes.
Building a dynamic private sector capable of creating large numbers of productive jobs will take years. Improving infrastructure, attracting investment, strengthening education and vocational training, and supporting entrepreneurship are all part of the solution. So too is addressing the cultural and social barriers that continue to limit women’s participation in the labour market.
At the same time, overseas employment will almost certainly remain an important part of Timor-Leste’s development story. Remittances from migrant workers already account for around 11 per cent of cash inflows into the country, making them one of the country’s largest sources of foreign income after petroleum. Rather than viewing migration simply as an escape valve for unemployment, policymakers should also see it as an opportunity. Investing in skills development can help more Timorese access higher-skilled, better-paid jobs overseas while ensuring they gain experience and income that can ultimately benefit their families and their country.
Timor-Leste’s employment challenge is therefore not simply about reducing unemployment. It is about creating an economy where young people can imagine a future at home, where work is productive and rewarding, and where migration becomes a choice rather than a necessity. The country’s greatest resource is not its petroleum reserves—it is its people. Ensuring they have the opportunity to realise their potential may be the most important investment Timor-Leste can make in its future.
