DTIS, Volume I - Enhanced Integrated Framework (EIF)

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II. Employment The labour force consisted of nearly 100,000 persons in 2004. Despite the progress made in economic performance and other aspects of human development, there are relatively high levels of unemployment, estimated at 14 per cent for 2004, with female unemployment at 23 per cent and male unemployment at 7 per cent. 4 Under-employment is estimated at 33 per cent nation-wide, meaning that part of the Maldivian labour force that is counted as employed, but this employment is not full-time due to factors such as seasonality etc. Underemployment is higher in atolls with 35 per cent compared to 28 per cent in Male’. Table 2.2: Share of GDP by Main Economic Activity (in pct.) ISIC Industry/ Economic Activity 2000 2001 2002 2003 2004 GDP at Basic Price 100 100 100 100 100 Primary 9.4 9.5 10.4 9.7 9.3 A Agriculture 2.8 2.8 2.7 2.6 2.5 B Fisheries 6 6.1 7.1 6.6 6.2 C Coral and sand mining 0.6 0.6 0.6 0.6 0.5 Secondary 14.4 15.1 15.6 15.6 15.2 D Manufacturing 8 8.1 8.8 8.5 7.8 Fish preparation 2.1 2.3 3 2.7 2.5 E Electricity and water supply 3.2 3.4 3.5 3.6 3.8 F Construction 3.2 3.5 3.3 3.5 3.6 Tertiary 80.1 79.3 77.9 78.6 79.6 G Wholesale and retail trade 4.5 4.4 4.2 4.1 4 H Tourism (Resorts, etc.) 33 31.9 30.9 32.7 32.9 I Transport and communications 14.5 14.2 14.3 14.2 15.4 J Financial services 3.4 3.4 3.4 3.3 3.3 K Real Estate 7.8 7.7 7.6 7.2 6.9 K Business services 2.9 2.9 2.9 2.8 2.7 L Government Administration 11.8 12.7 12.6 12.4 12.6 M, N, O Education, health and social services 2.2 2.1 2 1.9 1.8 Financial services indirectly measured -3.9 -3.9 -3.9 -4 -4 Source: Table 15.1, 25 Years Statistics, MPND, 2005 These unemployment assessments are in line with assessments of poverty and income disparities. The labour market has developed in a rather skewed manner with the public sector performing the role of employer of last resort. Public sector employment can in fact be considered as part of a social welfare system. Public sector employment absorbed 30 per cent of the labour force in 2004. Private businesses in dynamic sectors such as tourism, construction and transport and communications have increasingly imported the skills they require from the South Asia region, notably from Sri Lanka and Bangladesh. Of the estimated 27,000 jobs in the tourism sector in 2004, foreign workers held 12,649. 4 See chapter 4 for a more detailed discussion. 7
This relatively high proportion of foreign employment is mostly due to the shortage of relevant skills among Maldivians and also to labour market rigidities related to cultural and traditional norms, especially concerning women. For example, while in many countries the garment industry is dominated by women, before the collapse of the industry in the Maldives, the Maldivian work force was not able to adjust to an industrial style working environment and most of the employment that was created went to imported labour. Similarly, in the tourism sector, most hospitality related work is not considered suitable for women for cultural and religious reasons. The result is that employment opportunities are lost, accounting for levels of unemployment and underemployment that are relatively high. To this extent, a key part of the explanation of the unemployment problem among Maldivians is the effect of labour market rigidities. High economic growth has been accompanied by relatively low employment content as a significant proportion of the jobs created were taken up by imported labour. The fishery sector, traditionally a major employer, has also been in decline. While the national labour force grew by 60 per cent between 1990 and 2000, the share of fishery sector employment fell by 10 per cent. III. Exchange Rate Regime Since October 1994 the Maldives has maintained a de facto fixed exchange rate with the Rufiyaa pegged (or anchored) to the U.S. dollar. 5 No exchange rate restrictions, such as surrender requirements, exist. The Rufiyaa is fully convertible for current and capital account transactions. Residents and non-residents can freely hold foreign currency accounts. Investment proceeds can be fully repatriated, and offshore borrowings are allowed. Commercial banks buy and sell foreign currencies without restriction. However, the peg to the U.S. dollar has resulted in an appreciation of the Rufiyaa's real effective exchange rate by around 35 per cent since 1995. This has affected the Maldives' competitiveness, especially with regard to fishery and tourism, slowing export growth and economic diversification. 6 During this period, the government's capital and current expenditures increased imports and demand for foreign currency at the fixed exchange rate, resulting in a foreign exchange shortage. External factors such as the adverse terms of trade due to rising oil and falling fish prices as well as repayment of overseas borrowings to finance the expansion of tourist resort facilities also contributed to the 5 The buying and selling margins around the central currency rate are set at a narrow band of plus or minus 5 laari i.e. currently from Rf 12.75 to Rf 12.85. 6 The negative effect of the appreciation of the currency on the tourism industry is on the demand side rather than on the supply side. On the supply side, the industry imports most of its supplies and uses a high proportion of expatriate labour paid in U.S. dollars. But on the demand side, the affect of currency appreciation may be to reduce tourism income, which is mostly from Europe, Euro-zone and Asian countries. 8
Page 1 and 2: FINAL R E P O R T Volume 1 MALDIVES
Page 3 and 4: GSP HACCP HDFC HDI HIES HH HRD HS I
Page 5 and 6: TRIPS TRTA TSA TTMP UAE UK UNCTAD U
Page 7 and 8: CHAPTER 6: CUSTOMS SERVICES AND TRA
Page 9 and 10: major stakeholders as the basis of
Page 11 and 12: C. ECONOMIC TRENDS Buoyant GDP grow
Page 13 and 14: WTO members (through the Committee
Page 15 and 16: The recommendations cover these iss
Page 17 and 18: Requirements Action no. Action reco
Page 25 and 26: government, and lawmakers are elect
Page 27 and 28: . 4
Page 29: to Sri Lanka. However, by 2004 the
Page 33 and 34: On an annual basis, total NFA of th
Page 35 and 36: elow provides data on the public in
Page 37 and 38: According to the estimates prepared
Page 39 and 40: Table 2.8: Damage to agricultural f
Page 41 and 42: II. Imports - Merchandise There has
Page 43 and 44: the relatively high rate of unemplo
Page 45 and 46: A. DESTINATION OF MERCHANDISE EXPOR
Page 47 and 48: Penetration of international market
Page 49 and 50: Overall, the importance of foreign
Page 51 and 52: on goods deemed luxury goods (e.g.
Page 53 and 54: the Japan and USA markets. 11 Fish
Page 55 and 56: The Modalities provide that the res
Page 57 and 58: emoved. However, in order to provid
Page 59 and 60: EBA. Appropriate transition arrange
Page 61 and 62: Several provisions such as Article
Page 63 and 64: CHAPTER 4 POVERTY REDUCTION AND HUM
Page 65 and 66: Table 4.2: Poverty Gap Ratios per R
Page 67 and 68: produced locally and are readily av
Page 69 and 70: commerce, information and communica
Page 71 and 72: Table 4.3: Fishery Sector employmen
Page 73 and 74: This also requires policies that ta
Page 75 and 76: with routine functions of administe
Page 77 and 78: Applying for a license to invest in
Page 79 and 80: E. MINISTRY OF FISHERIES, AGRICULTU
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K. PRIVATE SECTOR STAKEHOLDERS Priv
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Overall, it is estimated that the c
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The cash is held and disbursed by t
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difficult to reach given the except
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system of micro-credit intermediari
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F. LAND, RAW MATERIALS AND SUPPLIES
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B. LABOUR MARKET REFORM About 44 pe
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Appendix The mixed record of the Ma
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legislation incorporates the initia
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CHAPTER 6 CUSTOMS SERVICES AND TRAN
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Maldives Port Authority • Respons
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the correct amount of customs duty
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suspense procedures, thus eliminati
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A new domestic terminal at MIA will
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There is need to clarify MAC’s na
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Changes in the role and structure o
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Significant improvements have been
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CHAPTER 7 THE TOURISM SECTOR Chapte
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British market in 2001. In 2004, be
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Similarly, considerable demand was
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for imports of support infrastructu
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government revenues from the supply
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number of trainees that have been t
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established as a quality tourism de
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Maldives' unspoiled marine environm
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The Faculty works very closely with
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TOURISM ACT A key objective of the
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HRD studies and conduct of necessar
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D. ESTABLISH AN ENABLING BUSINESS E
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Main Recommendation No. 5: review a
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Main Recommendation No. 6: Scale-up
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CHAPTER 8 FISHERY SECTOR Chapter Pl
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processing under-performing more th
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per cent - see Table 8.4. The secto
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In the light of these market trends
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documentation, and administration.
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monitoring and evaluation dates fro
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and catering industry chefs demand
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It is expected that the trial fishe
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• Can seaming and retorting; •
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DTIS, Volume I - Enhanced Integrated Framework (EIF)

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