Uganda’s Economy Finds Work for Only One in Three Young People Entering the Labor Market
Around 700,000 Ugandans reach working age each year, but the economy absorbs only about 200,000. High unemployment and widespread underemployment highlight the labor market's structural weaknesses. The growing influx of young workers is increasing pressure for long-term job creation. Every year, about 700,000 young Ugandans reach working age, according to. . .
Around 700,000 Ugandans reach working age each year, but the economy absorbs only about 200,000. High unemployment and widespread underemployment highlight the labor market's structural weaknesses. The growing influx of young workers is increasing pressure for long-term job creation. Every year, about 700,000 young Ugandans reach working age, according to the National Planning Authority (NPA). The World Bank confirmed that figure in November 2025, adding that the country's economy creates jobs for just over 200,000 of them. That means only about one in three new entrants finds work—whether in the formal sector, the informal economy or self-employed farming—leaving Uganda's labor market under growing strain. What the numbers reveal about Uganda's labor marketThe Uganda Bureau of Statistics (UBOS) captured that pressure in its 2025 Labor Force Survey. The national unemployment rate stood at 12. 2%, rising to 16. 1% among people aged 18 to 30 and 18% among those aged 15 to 24. Another indicator paints an equally concerning picture: labor underutilization, which measures people working fewer hours than they would like or those who have stopped looking for work. The national rate reached 41. 6%, climbing to 58. 3% among 15- to 19-year-olds, the age group most affected. Much of this reflects the dominance of the informal economy, which employs about nine out of every 10 Ugandan workers, according to UBOS. By comparison, the formal sector accounts for just 2. 37 million workers, a modest figure against the country's 26. 4 million potential workers. As a result, the employment-to-population ratio stands at only 44. 7%. The survey also found that more than 46,000 formal jobs disappeared during the reporting period because of layoffs and workforce reductions across several sectors. Regional disparities add to the challenge. Bukedi and Teso recorded the country's highest unemployment and underemployment rates, while Bunyoro and West Nile performed significantly better. Conducted among more than 9,800 households and based on the 2024 population census, the survey also marks a methodological shift. UBOS now plans to publish labor market indicators every quarter to better track changes over time. Structural challenges persistAgainst this backdrop, private sector initiatives are attempting to create new opportunities. One example is the venture capital fund launched by Legacy Hills Investments, which plans to finance startups in fintech, agriculture, digital health and clean energy. However, a single investment fund—even one backed by institutional investors—will not be enough to absorb the steady influx of young workers. The NPA expects the number of new entrants into the labor market to rise to one million a year between 2030 and 2040. UBOS data point to an economy that remains heavily dependent on informal work and subsistence activities. More importantly, they underscore the need for structural solutions to create jobs for Uganda's young and rapidly growing workforce, well beyond startup financing. Félicien Houindo Lokossou