Tanzania’s Private Sector Employs 70% of Formal Workers, but Public Employees Earn More Than Twice as Much

Tanzania’s private sector now accounts for more than seven in every ten formal jobs, but the latest national employment and earnings data show that public sector workers continue to earn substantially more on average, exposing a labour market in which businesses carry most of the formal employment burden while government remains the more lucrative employer for a large share of salaried workers. The Tanzania Formal Sector Employment and Earnings Survey 2024/25, produced by the National Bureau of Statistics and the Office of the Chief Government Statistician, counted 4.57 million formal sector employees across the United Republic, of whom 3.22 million, or 70.5 percent, worked in the private sector and 1.35 million, or 29.5 percent, were employed in the public sector. The wage structure, however, moves in the opposite direction. Average monthly cash earnings across the formal economy rose to TZS 689,730 in 2024/25 from TZS 609,354 a year earlier, but public sector employees earned an average of about TZS 1.34 million a month compared with approximately TZS 623,000 in the private sector. Public employees were therefore earning more than twice the private sector average even though private firms employed more than twice as many people. The gap becomes even clearer when regular citizen employees are grouped by wage band. Of the 2.44 million regular citizen employees working in the private sector, 916,679 earned up to TZS 299,999 a month and another 1.13 million earned between TZS 300,000 and TZS 699,999. Only 393,431 earned more than TZS 700,000. In the public sector, none of the 1.33 million regular citizen employees fell below TZS 300,000, while 881,612, roughly two thirds of the public workforce in that category, earned above TZS 700,000. The figures show a formal labour market that is expanding through private enterprise but still rewards government employment more generously on average. That has implications for recruitment, productivity and the wider structure of Tanzania’s labour market because the private sector is expected to absorb a growing working age population while competing for skilled workers against a public sector that offers substantially higher average pay. Formal Employment Has Reached 4.57 Million The Employment and Earnings Survey provides one of the clearest pictures of Tanzania’s salaried economy because it focuses specifically on formal establishments rather than the much larger informal labour market. Its coverage includes all public sector establishments, private establishments with 50 or more employees and a sample of private firms employing between five and 49 workers on Mainland Tanzania, alongside formal establishments in Zanzibar. Household employment, unpaid family labour, non salaried proprietors and the armed forces are excluded. This matters because the survey is measuring the segment of Tanzania’s labour market most closely associated with regular wages, payroll taxation, pension contributions, employment contracts and structured employer employee relationships. Within that formal economy, the private sector is already the dominant employer. Its 3.22 million workers far exceed the 1.35 million employed by the public sector, reinforcing the extent to which Tanzania’s future job creation will depend on the ability of private firms to expand rather than on continued growth in government payrolls. The issue is therefore not whether the private sector creates employment. It already does so at much greater scale than government. The harder question is whether those jobs generate enough productivity and profitability to support higher wages. More Than Two Million Private Workers Earn Below TZS 700,000 The wage distribution inside the private sector is one of the most consequential findings in the survey. Of the 2.44 million regular citizen private sector employees included in the wage distribution, more than two million earned below TZS 700,000 a month. About 37.6 percent earned no more than TZS 299,999, while another 46.2 percent earned between TZS 300,000 and TZS 699,999. Only about 16 percent were above the TZS 700,000 threshold. By contrast, around 66.5 percent of regular citizen public sector employees were above TZS 700,000. That difference shapes household economics well beyond the workplace. Workers on regular salaries are more likely to qualify for bank credit, mortgages, insurance and pension products, while higher wages increase disposable income and support consumption. The concentration of private sector workers in lower wage bands therefore affects the depth of the consumer economy as well as labour conditions. The disparity also helps explain why government employment remains attractive even where private sector opportunities are numerically greater. Public sector positions can offer more predictable career structures, pension arrangements and job security in addition to higher average monthly pay. For employers, narrowing that gap is difficult because wages cannot sustainably rise faster than the value employees produce. Higher private wages therefore depend partly on productivity, business profitability, access to technology, capital investment and the ability of firms to move into higher value activities. Manufacturing Employs Large Numbers but Pays the Lowest Average Wage The industry level data reveal another important tension between job creation and pay. Manufacturing is one of Tanzania’s largest formal employers, accounting for about 717,724 workers, or 15.7 percent of formal employment, second only to education. Yet manufacturing also recorded the lowest average monthly cash earnings among the industries covered by the survey at TZS 422,346. Accommodation and food services followed at TZS 552,567. At the other end of the labour market, financial and insurance activities paid the highest average monthly earnings at TZS 1.31 million, followed by public administration, defence and compulsory social security at TZS 1.26 million. This pattern matters for Tanzania’s industrialisation ambitions because manufacturing is expected to absorb labour at scale, particularly workers moving out of lower productivity agriculture and informal activity. If manufacturing succeeds in creating jobs but those jobs remain among the lowest paid in the formal economy, the sector may expand employment without generating the household income growth typically associated with industrial transformation. The explanation is partly structural. Manufacturing includes large numbers of semi skilled and production workers, while finance, administration and professional services generally employ smaller numbers of workers with higher levels of education and specialist skills. But the wage gap still raises questions about productivity inside Tanzania’s factories and the extent to which manufacturing firms are moving into products with higher margins and greater value added. Higher manufacturing wages will ultimately depend on firms producing more value per employee, whether through machinery, technology, management improvement, export access or movement into more sophisticated products. Regular Workers Earn More Than Three Times Casual Employees The survey also exposes a large divide inside formal establishments themselves. Regular employees earned an average of TZS 768,196 a month, while casual workers earned only TZS 231,411, meaning regular employees received more than three times the average monthly cash earnings of casual workers. Among private profit making institutions, regular workers earned an average TZS 689,370 compared with TZS 230,312 for casual workers. In central and local government, regular employees averaged TZS 1.37 million while casual workers earned TZS 234,408. Parastatal organisations paid regular employees an average of TZS 1.35 million compared with TZS 266,700 for casual workers. The distinction reinforces how strongly employment status influences earnings even within the formal economy. A worker can be employed by a registered institution and still occupy a relatively insecure, low wage position if the employment relationship is casual rather than regular. Manufacturing is particularly relevant because it accounts for 27.9 percent of all casual formal sector employment, the largest share of any industry, followed by agriculture, forestry and fishing at 14.7 percent. This suggests that part of Tanzania’s formal industrial employment base continues to depend on flexible labour arrangements that keep employer costs lower but also limit income security for workers. Formal Employment Is Highly Concentrated in Dar es Salaam Tanzania’s formal labour market also remains geographically concentrated. Dar es Salaam alone accounted for 1.57 million formal employees, equivalent to 34.5 percent of the national total. Morogoro followed with 7.4 percent, Arusha with 5.1 percent and Mbeya with 4.9 percent. The concentration is even stronger within parts of the private sector. Dar es Salaam accounted for 39.3 percent of adult private sector employees and 48.5 percent of youth employees in private firms, underlining the city’s disproportionate role as Tanzania’s main centre of formal employment. This geographic imbalance reflects the concentration of companies, finance, trade, logistics, communications and professional services in Dar es Salaam, but it also means that formal employment opportunities remain much thinner across large parts of the country. Regional industrialisation therefore becomes a labour market issue as much as an infrastructure issue. New factories, logistics hubs, processing facilities and service businesses outside Dar es Salaam can broaden formal employment while reducing pressure on migration into the country’s commercial capital. The same concentration appears in wages. Dar es Salaam accounted for 31.4 percent of the annual wage bill on Mainland Tanzania, followed by Morogoro at 7.4 percent and Arusha at 5.7 percent. Tanzania’s Formal Wage Bill Has Reached TZS 51.3 Trillion The formal labour market has become a substantial component of the economy in its own right. Tanzania’s annual wage bill reached TZS 51.29 trillion in 2024/25, up from TZS 37.02 trillion in the previous survey period, with the private sector accounting for TZS 29 trillion and the public sector TZS 22.29 trillion. Education represented 24.9 percent of the total wage bill, the largest share of any industry, followed by public administration, defence and compulsory social security at 13.2 percent. Manufacturing accounted for roughly 10 percent. Another measure, total annual cash earnings recorded in the survey, reached about TZS 50.06 trillion, with education contributing TZS 12.62 trillion, public administration and defence TZS 6.59 trillion and manufacturing about TZS 5.09 trillion. The distinction between the broader wage bill and employee cash earnings is important, but both measures show the size of formal labour income flowing through Tanzania’s economy. Wages support household consumption, savings, taxes, pension contributions and demand for financial services, meaning the growth of formal payrolls has effects well beyond employment statistics. More Than Half of New Recruitment Came From Newly Created Jobs The survey also provides evidence that formal employment is still expanding rather than simply replacing departing workers. Tanzania recorded 155,510 newly recruited workers during 2024/25, of whom 83,821, or 53.9 percent, filled newly created positions while 71,688 were recruited into existing vacancies. Professionals represented the largest occupational category among new recruits at 35.5 percent, followed by technicians and associate professionals at 16.6 percent and elementary occupations at 15.6 percent. The recruitment profile suggests that part of Tanzania’s formal economy is creating demand for skilled labour rather than only low wage employment. More than 43,000 newly recruited workers entered positions with starting salaries above TZS 700,000, including more than half of newly recruited professionals. Dar es Salaam again dominated recruitment, accounting for 38,235 new workers, or 24.6 percent of the national total, followed by Morogoro with 19,982 and Dodoma with 11,765. The figures show that formal job creation exists, but it is uneven by region, industry and skill level. The Private Sector Has the Employment Burden, but Not Yet the Wage Advantage Tanzania’s labour market is therefore developing along two parallel tracks. The private sector has become the dominant source of formal jobs and is responsible for most of the country’s formal wage payments in aggregate, but individual private sector workers continue to earn substantially less than their public sector counterparts on average. This has important implications for Tanzania’s development model because government cannot indefinitely serve as the benchmark employer while the private sector is expected to absorb the majority of future labour force growth. The economy will need firms that can employ large numbers of workers and pay them increasingly competitive wages without undermining business viability. That will require productivity growth rather than wage increases alone. Companies that gain access to larger markets, cheaper finance, better infrastructure, modern machinery and more skilled workers are better positioned to raise output per employee and therefore support higher salaries. The survey’s figures also show why the composition of formal employment matters. A country can add jobs while still leaving large numbers of workers in low wage manufacturing, casual employment or lower salary private positions. The longer term objective is to expand formal employment while also increasing the share of workers moving into regular, productive and better paid roles. The private sector already employs most of Tanzania’s formal workforce. The next stage of labour market development will depend on whether it can also become the place where workers expect to earn more.