Business
Nine out of every 10 employed Ugandans work in informal sector — UBOS report
Hakim Mulema, an economic policy analyst at HLM Ventures Limited, said Uganda has a significant informal economic segment comprising people earning through small businesses, self-employment and casual work but remaining largely outside formal employment structures.
The Market Survey indicates that 91.7% of employed Ugandans aged 14 to 64 were in informal employment when agriculture is included. (New Vision/Files)
By: Nelson Mandela Muhoozi, Journalist @New Vision
KAMPALA - About nine out of every 10 employed Ugandans work in the informal sector, according to the Uganda Bureau of Statistics (UBOS) Labour Market Survey for the first quarter of the 2026/2027 financial year.
The Market Survey indicates that 91.7% of employed Ugandans aged 14 to 64 were in informal employment when agriculture is included.
Even when agriculture is excluded, informal employment remains widespread, accounting for 87% of employed people outside the sector.
The data analysis means that only about 13% of workers employed outside agriculture are in formal employment, highlighting the scale of the challenge facing Uganda as it seeks to create secure and productive jobs.
The survey further shows that informality is more pronounced in rural areas, where 95.4% of employed people were in informal employment, compared with 86.5% in urban areas.
Regionally, the Western region recorded the highest informal employment rate at 93.7%, followed by Northern at 93.5%, Eastern at 92.7% and Central at 88.1%.
The survey estimates that 9.26 million Ugandans, representing 44.3% of the population aged 15 and above, are experiencing some form of labour underutilisation.
This includes people without jobs, those working fewer hours than they would like and people who want employment but are not actively participating in the labour force.
Dr Madina Guloba, an economist at the Economic Policy Research Centre (EPRC), said the labour market figures reflect the reality that many Ugandans enter informal employment simply to generate income, even when the work available does not fully utilise their time and capabilities.
She explained that some businesses increasingly use shift arrangements and partial-day engagements to manage payroll costs, while young people also engage in digital and online gigs without necessarily securing adequate or consistent work.
Guloba said the rising cost of doing business, including taxes, wages, National Social Security Fund contributions and workplace safety requirements, also affects employers' ability to sustain formal employment.
She added that businesses facing financial constraints and declining demand sometimes respond by reducing their workforce or slowing expansion.
Hakim Mulema, an economic policy analyst at HLM Ventures Limited, said Uganda has a significant informal economic segment comprising people earning through small businesses, self-employment and casual work but remaining largely outside formal employment structures.
The survey estimates that 9.26 million Ugandans, representing 44.3% of the population aged 15 and above, are experiencing some form of labour underutilisation.
This includes people without jobs, those working fewer hours than they would like and people who want employment but are not actively participating in the labour force.
Dr Madina Guloba, an economist at the Economic Policy Research Centre (EPRC), said the labour market figures reflect the reality that many Ugandans enter informal employment simply to generate income, even when the work available does not fully utilise their time and capabilities.
She explained that some businesses increasingly use shift arrangements and partial-day engagements to manage payroll costs, while young people also engage in digital and online gigs without necessarily securing adequate or consistent work.
Guloba said the rising cost of doing business, including taxes, wages, National Social Security Fund contributions and workplace safety requirements, also affects employers' ability to sustain formal employment.
She added that businesses facing financial constraints and declining demand sometimes respond by reducing their workforce or slowing expansion.
Hakim Mulema, an economic policy analyst at HLM Ventures Limited, said Uganda has a significant informal economic segment comprising people earning through small businesses, self-employment and casual work but remaining largely outside formal employment structures.
He described this as the labour market’s “missing middle”, noting that much of the economic activity takes place through systems such as mobile money, Village Savings and Loan Associations (VSLAs) and Savings and Credit Cooperative Organisations (SACCOs).
Mulema said the challenge is to improve the productivity of these workers and businesses while gradually integrating them into formal economic systems.
He added that technology is transforming the nature of work, automating some traditional roles while creating demand for new skills.
Mulema said government efforts to integrate systems, including through the use of the National Identification Number (NIN), provide opportunities to improve identification and access to formal economic services.
The informal employment findings also raise concerns about workers' ability to save for retirement and access employment-related benefits.
Unlike many formal-sector employees, workers in informal arrangements may not receive regular salaries, employer-supported retirement contributions, or other employment benefits.
The UBOS survey also shows significant differences in labour market participation between men and women.
Among people aged 14 to 64, women’s labour force participation stood at 48.5%, compared with 63.2% for men. Labour underutilisation was also higher among women at 52%, compared with 36.7% among men.
Mulema said the challenge is to improve the productivity of these workers and businesses while gradually integrating them into formal economic systems.
He added that technology is transforming the nature of work, automating some traditional roles while creating demand for new skills.
Mulema said government efforts to integrate systems, including through the use of the National Identification Number (NIN), provide opportunities to improve identification and access to formal economic services.
The informal employment findings also raise concerns about workers' ability to save for retirement and access employment-related benefits.
Unlike many formal-sector employees, workers in informal arrangements may not receive regular salaries, employer-supported retirement contributions, or other employment benefits.
The UBOS survey also shows significant differences in labour market participation between men and women.
Among people aged 14 to 64, women’s labour force participation stood at 48.5%, compared with 63.2% for men. Labour underutilisation was also higher among women at 52%, compared with 36.7% among men.