Uganda has set ambitious plans to grow its economy from USD 50 million in 2025 to USD 500 million by 2040. To achieve this, the country has prioritised several key sectors, including agro-industrialisation, tourism, mineral development, and science, technology and innovation. The anchor sectors prioritised for the achievement of ten-fold strategy are dominated by private sector players, and as such workers form an integral part of driving the productivity within these sectors. This brings to the fore the importance of workers’ welfare in the workplace.
Despite the centrality of workers for achievement of the country’s growth ambition, policy attention has often emphasized curbing high unemployment rates especially among the youth. According to the 2025 Uganda Bureau of Statistics (UBoS) national labour market survey, national unemployment rate stands at 12.2 percent while youth unemployment (18-30 years) stands at 16.2 percent.
Yet, beneath the high unemployment rates lies a deeper structural issue that continues to affect the country’s labour productivity, the overwhelming growth of labour informality. The national labour market survey approximates that 7.3million employees operate in informal business. That means that majority of workers are employed without contracts, do not contribute the social security, and are not entitled to employment benefits which include but are not limited to sick, compassionate, maternity, annual leave and any form of social protection.
Informal workers also exist even in formal workplaces, increasing the complexity of informality within Uganda’s labour sector. Indeed, according to the 2025 national labour market survey, 1.3million employees operate informally in formal workplaces. This evidence has implications for workers’ job security, workplace conditions, old age poverty, and increased future fiscal pressures on Government’s budget to provide social protection to vulnerable workers. Indeed, informal workers are more vulnerable to income shocks, illness, and exploitation relative to their formal counterparts. In a country where social protection systems are still developing, this leaves millions of workers exposed to future economic insecurity.
Considering economic sectors, labour informality remains deeply entrenched within service sector, with approximately 6.1million (83.3%) employees operating informally. This points to low productivity within the sector that contributes the highest to Uganda’s economy. In addition, the services sector is followed by manufacturing sector (1.2m) representing 16.1 percent and the agriculture sector with 42,547 (0.6%).
Therefore, to curb the high prevalence of labour informality in Uganda and improve workers productivity, government should;
First, increase labour inspection at the workplaces: Uganda’s labour market is governed by the Employment Act (Cap 226) and the Occupational Safety and Health (OSH) Act (Cap 231), which mandate the Ministry of Gender, Labour and Social Development to regulate working conditions, ensure employee welfare, and enforce workplace safety standards. These laws also require all workplaces to be registered, providing a foundation for monitoring compliance. In theory, this framework should support a well-regulated labour market. Enforcement remains extremely limited. A 2025 study by the Economic Policy Research Centre (EPRC) reveals that in financial year 2023/24, only about 600 establishments were inspected for occupational safety and health compliance out of over one million workplaces. Similarly, only 167 workplaces underwent general labour inspections. This translates into inspection coverage of less than 0.1 percent of all workplaces. Such limited oversight creates an environment where non-compliance goes largely undetected.
Second, provide adequate labour inspection manpower: labour informality is further compounded by severe capacity constraints within the inspection system. Uganda currently has only 21 occupational safety and health inspectors (OSH) and about 198 labour officers to oversee a workforce of more than 10 million people. This means that each OSH inspector is responsible for approximately 486,000 workers. By comparison, the International Labour Organization (ILO) recommends a ratio of one inspector for every 40,000 workers. To meet this benchmark, Uganda would need at recruit at least 255 more inspectors.
Moreso, re-centralise the labour inspection function. Labour inspection in Uganda is largely decentralised, with inspectors deployed at the district level under local governments. While decentralisation is intended to improve service delivery, in practice it has led to fragmentation. Whereas the Ministry of Gender, Labour and Social Development is mandated to oversee labour regulation, it has limited direct control over district-level officers, who are deployed by the Ministry of Public Service.
This results in inconsistent enforcement of labour laws across districts, with some areas conducting minimal or no inspections at all. This arrangement also falls short of international standards. The ILO emphasises that labour inspection systems should be centrally coordinated to ensure uniformity, accountability, and effectiveness. Without such coordination, even the limited resources available are not used efficiently.
Finally, raising public awareness is critical. Both employers and workers need to understand the benefits of formalisation, which include increased access to finance, legal protection, and improved working conditions.
