The economic and social future of Timor-Leste’s people is increasingly driven by the need for jobs at home and labour mobility programs abroad. More than simply providing remittances, mobility programs will improve skills and human capital.

Despite progress, Timor-Leste continues to face immense challenges. The legacy of conflict remains with far-reaching implications. Approximately two-thirds of Timor-Leste’s 1.34 million people still live below US$2 per day, and while child mortality rates have improved, many children under five still die of preventable and treatable diseases. High birth rates, limited family planning, and a bulging youth population place pressure on both government and a weak private sector to create meaningful jobs and shore up national stability.

Economic prosperity is crucial to support priorities like health and education. Job creation is also seen as vital to deal with social issues, including the issue of martial arts gangs in Timor-Leste.

Currently, Timor-Leste’s government spending is supported by its Petroleum Fund, which in the future faces the risk of running dry as oil reserves diminish, and revenues reduce. It is estimated this could occur within 10-15 years. There is a live debate in Timor-Leste about long-term economic resilience. The view is contested in Timor-Leste on what the right long-term trajectory for the country is in terms of using economic resources now for the future.

But all agree there is a critical need for swift and considered economic diversification.

Yet, impeding this progress are various factors, including a neonatal mortality rate of three times the regional average, severe and acute malnutrition among children and mothers, the highest rate of stunting in Southeast Asia, and high rates of gender-based violence. These factors impact on education outcomes, and in turn on skills development and economic opportunity for Timor-Leste’s youthful population.

So, is labour mobility to Australia a potential answer?

In some Pacific countries, labour mobility has had an impact of the sort that foreign aid could never hope to have – but, for Timor-Leste, participation rates have been low, partly since it was only included in 2019. Some predict that remittances earned by Timorese working abroad are going to be of critical importance as oil and gas revenues dry up.

There are now two programs which enable Timorese to work in Australia.

The Pacific Australia Labour Mobility (PALM) Scheme connects Australian employers with workers from nine Pacific Island countries and Timor-Leste. The scheme helps to fill labour gaps in regional and rural Australia while providing opportunities to Pacific and Timorese workers to develop skills, earn income, and send money home to support their families and communities and the economic growth of their countries.

There is also now a Pacific Engagement Visa that complements the PALM scheme by offering a permanent visa pathway to citizens of Pacific Island countries and Timor-Leste. It is being designed in consultation with partner governments and communities to ensure it delivers on shared needs and objectives. It will commence in July 2023.

The basis for these programs is the belief that labour mobility can be a focus of shared engagement to form the basis of the long-term economic relationship. In line with this, Australia is expanding labour mobility by continuing to open up its labour market to create new opportunities for Timorese, and progressively enlarge pathways to permanency in its migration program. In doing so, clearly Australia should address any flaws that create the risk of exploitation.

There is evidence that Timorese value the program. Many more Timorese apply to go than are selected. One study reported that though the total number of Timorese participating is relatively small, this is not reflected in public discourse, where talk of “picking fruit in Australia” is everywhere and involvement in the seasonal worker program has become a “coveted prize.”

A recent paper by the Asia-Pacific Development, Diplomacy & Defence Dialogue (AP4D) in partnership with the Asia Foundation found that Timorese groups are much more concerned with job creation in Timor-Leste than labour mobility.

Consultations with Timorese civil society organisations showed a view that industrial and private sector investment are areas where there is already significant progress. This has also been the case for investments from government and/or development partners, with petroleum and tourism following behind. By contrast, rural development and agriculture were under-invested, and perceived as areas requiring development partner support. This was also the case for environmental protection, a high priority requiring further support.

This suggests Australia should see its role as encouraging economic diversification through measures such as strengthening the agriculture and fisheries sectors; developing an adventure and peace-based tourism industry; and improved public financing. Support for improved public financing is important as a public administrative mechanism to encourage and strengthen economic diversification. An improved, enabling environment could capture connectivity, reduce public sector barriers such as regulatory impediments and boost financial services.

Consultations also suggested that development partner investments should have a greater focus on environmental protection. Australia could support Timor-Leste’s transition away from gas and LNG developments by leveraging its extractives expertise and exploring the potential for new mineral resources on land such as graphite, lithium, and cobalt, which the World Bank estimates demand will increase nearly 500 percent by 2050 to meet the growing demand for clean energy technologies.

There are examples of Australia focusing on job creation in Timor-Leste. The Australian and Timor-Leste governments are partnering to create local jobs and economic growth with a AU$97.7 million concessional financing package for the redevelopment of Presidente Nicolau Lobato International Airport in Dili. Australia’s contribution through the Australia Infrastructure Financing Facility for the Pacific (AIFFP) will deliver critical airport infrastructure components, such as improving road access to the airport terminal, lighting, a new rescue firefighting terminal, and a new healthcare facility. Australia’s investment has been designed to improve the lives of Timorese people and maximise local jobs, especially for women.

Another example is the recent renewal of the Northern Territory and Timor-Leste Strategic Partnership Agreement. In February 2023, the Chief Minister of the Northern Territory and Prime Minister Taur Matan Ruak witnessed the signature in Darwin of a renewed Strategic Partnership Agreement to 2027. The strategy outlines the Territory Government’s plan to be the preferred partner of business in an intensely competitive and rapidly evolving global market. Under the agreement, plans of action will identify initiatives to support education, business and workforce, trade and investment, tourism, emergency preparedness, agriculture, health, sports, arts, and culture.

Given the strong desire for job creation in Timor-Leste, labour mobility should be seen as a transitional step to building human capital and boosting household income. One benefit reported by Timorese involved in Australia labour mobility programs is improvement in their skills – and studies have shown how much remittances enable investment in family education. Labour mobility can help build the human capital needed for longer-term economic diversification.

This suggests that Australia should contribute to a long-term economic relationship with Timor-Leste both through improved labour mobility and migration pathways, and through working directly to support human development and economic diversification. It’s not an either/or choice: Timor-Leste needs both jobs at home and jobs abroad.

Melissa Conley Tyler FAIIA is Executive Director of the Asia-Pacific Development, Diplomacy & Defence Dialogue (AP4D). Philippa Venning is Vice President for Program Quality and Strategy at Abt Associates and a former Deputy Ambassador to Timor-Leste.

This draws upon AP4D’s report What does it look like for Australia to Shape a Shared Future with Timor-Leste funded by the Australian Civil-Military Centre. AP4D thanks all those involved in consultations and is grateful to The Asia Foundation for convening focus group discussions in Dili.