Informal economy in Indonesia and Timor-Leste

A small shop in Timor-Leste
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In both Indonesia and Timor-Leste the informal economy constitutes a substantial and important portion of the labour force. Overall the informal sector accounts for more than 60 per cent of the workforce. The “informal economy” refers to all economic activities by workers that are – in law or in practice – not covered (or insufficiently covered) by formal employment arrangements. Although it is hard to generalize about the quality and nature of informal employment, the characteristics include a lack of protection for non-payment of wages, retrenchment without notice or compensation, unsatisfactory occupational health and safety conditions and an absence of social benefits such as pensions, sick pay and health insurance. Women, migrants and other vulnerable groups of workers who are excluded from other opportunities have little choice but to take informal low-quality jobs.