This study examines the nature and functioning of the Mozambique labor market, where there is growing evidence that macroeconomic success has not delivered unambiguous socio-economic benefits at the household level. While Mozambique has boasted one of the world???s highest rates of GDP growth over the last 20 years and has successfully moved from post-conflict stabilization and reconstruction into a more mature developmental phase, it remains one of the poorest countries in the world. Rapid macroeconomic growth has not been accompanied by transformation of the labor market which remains dominated by (low productivity) rural agricultural workers, failing to generate high quality jobs that would effectively translate macroeconomic growth into welfare gains. The fundamental question is whether the limited transformation in jobs merely indicates challenges in other domains (such as insufficient capital accumulation) or rather is a core reason for the persistence of poverty. There is no evidence of a positive process of structural transformation in the employment landscape; rather, underemployment proliferates, education levels remain extremely low, and levels of labor productivity vary extremely across sectors. The analysis points to three jobs priorities: (1) address low levels of agricultural productivity; (2) foster the non-farm informal sector as a source of dynamism and entrepreneurship; and (3) aggressively support the growth of labor intensive secondary and tertiary industries with export.
