Tanzania Is Creating More Work, But 95.7% of Employment Remains Informal

Tanzania’s labour market absorbed more people into economic activity in 2025, with both labour force participation and the employment to population ratio rising from a year earlier, but the structure of work remains overwhelmingly informal, leaving the economy with a large number of people who are technically employed without necessarily having stable wages, formal contracts, social protection or the productivity gains associated with more structured employment. The 2025 Integrated Labour Force Survey, conducted jointly across Mainland Tanzania and Zanzibar and published by the National Bureau of Statistics and the Office of the Chief Government Statistician, shows the labour force participation rate increasing from 73.2 percent in 2024 to 75.9 percent in 2025, while the employment to population ratio rose from 68.7 percent to 71.4 percent. The survey, which covered 14,232 households and 60,889 individuals with a response rate of 99.63 percent, therefore points to stronger labour absorption during the year and a larger proportion of working age Tanzanians participating in economic activity. The difficulty is that employment growth has not been accompanied by a comparable shift toward formal, salaried and more secure work. Informal employment rose from 94.6 percent in 2024 to 95.7 percent in 2025, while employment specifically classified within the informal sector increased from 27.3 percent to 28.2 percent. Average weekly working hours also increased from 39 to 46, suggesting that Tanzanians were spending more time at work even as the structure of employment remained dominated by activities outside conventional formal arrangements. The distinction between employment and job quality is central to interpreting Tanzania’s labour market because a low unemployment rate does not necessarily imply that workers have entered productive, secure or adequately paid jobs. The ILFS itself describes informal employment as work where formal contractual arrangements may be absent and workers may not be covered by labour laws or social protection systems. The survey’s overall conclusion is that employment remains heavily concentrated in informal and vulnerable arrangements with limited absorption into stable paid jobs. Paid Employment Accounts for Only 13.2% of Workers The employment status data show how far Tanzania remains from a labour market dominated by regular wage employment. Dependent contractors account for 51.5 percent of employed persons, making them by far the largest category, while contributing family workers account for another 20.4 percent and independent workers in household market enterprises represent 14.7 percent. Employees, the category most closely associated with paid employment, account for only 13.2 percent of workers nationally. That structure means the majority of Tanzanians earn a living through arrangements that sit somewhere between conventional employment and self employment. Dependent contractors can include workers whose incomes rely heavily on one client, intermediary or platform but who do not enjoy the protections associated with employment contracts, while contributing family workers often participate in household businesses or farms without receiving regular wages. Together, these categories account for the overwhelming majority of employment and help explain why headline employment numbers can improve without necessarily producing an equivalent improvement in household income security. The gender distribution within these categories is also significant. Women account for a much larger share of contributing family workers, at 26.8 percent compared with 14.7 percent for men, while only 10.5 percent of employed women are classified as employees compared with 15.6 percent of men. The pattern suggests that women are more likely to be concentrated in forms of work where earnings are less formalised and where access to employment benefits, pensions, predictable wages and employment protection may be weaker. For Tanzania, this matters economically because wage employment performs several functions beyond providing income. Regular wages improve household planning, support access to credit, make contributions to pension and insurance systems more predictable, and strengthen the tax base. An economy in which most workers remain outside these arrangements can still grow, but the transmission of that growth into household financial security becomes weaker. Agriculture Still Employs More Than Half of the Country The sectoral distribution of employment shows that Tanzania’s labour market remains heavily anchored in agriculture. In 2025, agriculture accounted for 54.4 percent of employment, slightly higher than 54.2 percent in 2024, while services remained unchanged at 35.5 percent and industry declined from 10.3 percent to 10.1 percent. This is one of the most important structural findings in the survey because Tanzania’s long term development ambitions depend partly on moving labour into sectors where productivity and wages are generally higher. Agricultural employment remains essential to livelihoods and food security, but the sector’s ability to generate large productivity gains is constrained when much of the work remains small scale, low capital and dependent on household labour. A gradual movement into manufacturing, construction, logistics, technology and higher value services would ordinarily be expected as the economy industrialises. The 2025 data show that this transition is moving slowly. Industry remains the smallest of the three broad employment categories and actually lost a small share of total employment during the year. Services held its position rather than expanding, while agriculture continued to absorb the largest share of workers. The result is a labour market where employment growth is occurring without a strong reallocation toward sectors that could materially change productivity per worker. This does not mean agricultural employment is inherently unproductive, but it does mean that Tanzania’s structural transformation remains incomplete and that many workers continue to depend on activities with relatively low capital intensity and limited wage formalisation. More People Are Working, but They Are Also Working Longer The survey shows a sharp increase in the average time Tanzanians spend working. Average weekly hours rose from 39 in 2024 to 46 in 2025, with men working an average of 50 hours and women 41 hours. Among those aged 25 to 35, average working time reached 50 hours a week nationally. Longer working hours can reflect stronger demand for labour and greater economic activity, but they can also signal that households need to work more hours to maintain income, particularly where earnings remain low or unstable. The ILFS does not establish which of these explanations dominates, but the combination of rising hours, high informality and only marginal nominal income growth raises questions about how much additional productivity workers are generating from the extra time spent working. Average monthly wages increased only slightly from TZS 477,241 in 2024 to TZS 478,627 in 2025, according to the survey. The difference is small in nominal terms, meaning the purchasing power effect would depend on inflation during the period. The survey also notes that men continue to earn more than women across education levels and locations, indicating that labour market inequalities persist alongside the wider increase in employment. This combination is economically important because sustained improvements in living standards require growth in productivity and real earnings rather than simply an increase in hours worked. If workers spend more time in informal activities but their earnings change little, the labour market may be absorbing people without generating a proportionate improvement in household purchasing power. Tanzania’s Labour Market Still Has a Large Gender Gap The increase in labour participation was not evenly distributed between men and women. Male labour force participation reached 82.5 percent in 2025 compared with 69.7 percent for women, leaving a gap of almost 13 percentage points. That gap is reinforced by the employment structure. Women are more likely to work as contributing family workers and less likely to be employees, while the survey also identifies persistent gender wage differences. This means women participate less frequently in the labour market and, when they do participate, are more likely to occupy forms of work with weaker formal protections or less predictable remuneration. The economic consequence is that Tanzania is not drawing equally on the productive capacity of its male and female population. Higher female participation in stable and better paid employment would increase household income, expand savings and strengthen the formal financial system, while also broadening the pool of workers available to firms in sectors experiencing skills shortages. The 2025 ILFS therefore recommends measures aimed at retraining women, young people and persons with disabilities, reducing informal activity through business formalisation and stronger financial access, expanding social protection and promoting sectors with greater employment potential such as services, industry, technology and the blue economy. Informality Is Larger Than the Informal Sector One of the more important distinctions in the report is between employment in the informal sector and informal employment more broadly. Only 28.2 percent of employment is classified as being in the informal sector, yet 95.7 percent of all employment is informal. These figures are not contradictory because informal employment can exist inside enterprises or activities that are not themselves classified as informal sector businesses. A worker can be employed by a formal or semi formal enterprise while still lacking a formal contract, social protection or recognised employment relationship. This distinction is crucial for policy because formalising businesses alone will not automatically formalise workers. Tanzania could increase company registration, tax registration and licensing while still retaining a large workforce without written contracts, pension coverage or employment protection. The 2025 ILFS explicitly defines informal employment around the characteristics of the worker’s employment relationship rather than only the legal status of the business. Workers may be outside formal contracts, labour law protections or social protection systems even where the activity itself is commercially organised. For government, employers and financial institutions, this means labour formalisation has to proceed on at least two tracks: improving the legal and commercial status of enterprises while also improving the employment conditions of workers inside them. The Labour Market Is Absorbing People Faster Than It Is Upgrading Jobs The rise in the employment to population ratio from 68.7 percent to 71.4 percent is positive because it indicates that a larger share of Tanzanians is economically active and employed rather than outside the labour market. In a country with a young and expanding population, failure to absorb new workers would create much larger social and economic pressures. The more difficult challenge is that Tanzania is absorbing workers mainly into the same broad labour structures that have historically dominated the economy. Agriculture continues to employ more than half of workers, dependent contracting remains the largest employment status, paid employment remains limited and informality has increased rather than declined. This means employment quantity is improving faster than employment quality. That distinction will become increasingly important under Tanzania Development Vision 2050 because the country’s demographic profile will continue placing large numbers of young people into the labour market. Creating work for them is essential, but the economic return will depend on whether those jobs can generate rising productivity, tax revenue, savings, pension contributions and household consumption. An economy can sustain large numbers of informal workers, but it cannot easily reach upper middle income status if most employment remains low productivity, weakly protected and disconnected from formal financial and social protection systems. Tanzania Needs More Productive Work, Not Simply More Work The 2025 Integrated Labour Force Survey ultimately presents a labour market that is expanding but not yet transforming at the same speed. More Tanzanians are participating in economic activity, more are employed and average working hours have increased, but the overwhelming majority remain in informal work arrangements while paid employment remains a relatively small part of the labour market. The data also show that agriculture has not surrendered employment share to industry, services have stopped gaining ground and wage growth remains limited. These are important signals for a country whose long term development strategy depends on raising productivity, expanding manufacturing and services, increasing household incomes and building a broader formal tax base. Reducing informality will therefore require more than registering businesses. It will depend on whether firms can grow large enough to employ workers formally, whether small enterprises can access finance and markets, whether social protection can reach workers outside conventional payrolls and whether sectors capable of supporting higher productivity employment expand faster than the labour force. The positive story in the 2025 data is that Tanzania continues to find work for a growing population. The harder economic task is making that work more productive, more secure and better paid.