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Sources: PIB MoSPI Consultation January 30, 2025; ILO India Employment Report 2024; Quess Corp Workforce Trends Report September 2025; e-Shram portal data 2024; Springer Nature August 2025; Business Standard September 2025. Cited inline.
March 2026
India is the fourth-largest economy in the world. It is growing at nearly 7 percent in 2025. On paper, the numbers look strong. But underneath those headlines is a workforce story that most economic summaries quietly skip over.
Out of every 10 people working in India today, roughly 8 or 9 of them have no written employment contract. No provident fund. No paid leave. No legal protection if their employer decides to stop paying them. According to the ILO India Employment Report 2024, approximately 82 percent of India’s workforce is in the informal sector, and around 90 percent of all employed people work under informal conditions. A peer-reviewed study published in August 2025 confirmed that figure, putting informal employment at roughly 85 percent of all jobs in the country.
That is not a small or temporary problem. That is the primary structure of how most Indians earn their living.
The numbers become more real when you look at what informal workers actually earn. The government’s e-Shram portal, which was set up to register unorganised workers across the country, had 27.69 crore workers on its books by 2024. Of those registered workers, 94 percent reported earning Rs 10,000 or less per month. Only 4 percent earned between Rs 10,001 and Rs 15,000. Practically nobody earned more than that. More than 74 percent of these workers come from Scheduled Castes, Scheduled Tribes, or Other Backward Classes. The states with the highest number of registrations are Uttar Pradesh, Bihar, West Bengal, Madhya Pradesh, and Odisha. These are the same states that consistently rank at the bottom for per capita income in India. The geography of informal work and the geography of poverty in India are almost identical. (Sources: e-Shram portal data 2024; PIB MoSPI Consultation, January 30, 2025)
Despite being largely invisible in policy conversations, the informal economy is enormous. According to official data presented at a Ministry of Statistics consultation in January 2025, the informal sector contributed 45 percent of India’s total GDP in the financial year 2022-23. Nearly half of everything the Indian economy produces comes from workers who have no formal employment protection.
The income problem is made worse by a wage enforcement problem. The ILO’s 2024 report found that in 2022, 62 percent of unskilled casual agriculture workers were paid below the legally required minimum daily wage. In construction, that figure was 70 percent. These workers are not just without contracts. In most cases, they are also being paid less than what the law says they must receive, and there is little practical mechanism to change that.
Women bear a disproportionate share of this burden. According to PLFS 2023-24 data, 61 percent of women workers in the non-agriculture informal sector are in informal employment. While India’s female labour force participation has been rising, much of that growth is in informal, low-paid, and unprotected work. More women are working than before. That progress is real. The quality and security of that work is a separate, and much harder, conversation.
There is, however, a genuine and measurable shift happening at the margins. India is formalising its workforce, slowly but consistently. EPFO, the body that manages provident fund for formal workers, recorded 139.78 lakh net new subscribers in FY2024-25, its highest single-year enrolment ever. Over the previous seven years, 7 crore workers moved into formal employment with social security coverage. According to the ILO World Social Protection Report 2024-26, India’s social protection coverage doubled from 24.4 percent to 48.8 percent over the last decade, the fastest expansion in the country’s history. (Sources: Quess Corp Workforce Trends Report, Business Standard, September 8, 2025; PIB MoSPI Consultation January 2025; ILO World Social Protection Report 2024-26)
That progress deserves to be acknowledged clearly. At the same time, it needs to be placed in context. Seven crore transitions over seven years sounds significant. Against a base of 500 million informal workers, it represents just over 1 percent of the problem per year. The pace of formalisation and the scale of what remains are not yet in the same conversation.
The structural reasons why informality persists are not mysterious. There are more people looking for work than the formal economy can currently absorb. Minimum wage laws exist but enforcement is weak, particularly in agriculture and construction where the workforce is dispersed and largely unorganised. A large share of the workforce is concentrated in states with thin industrial bases and heavy agricultural dependence. And the regulatory systems that would push employers to formalise their workforces have historically been applied inconsistently.
From January 2025, the government began publishing monthly PLFS employment data and quarterly estimates of the informal sector’s GDP contribution, an improvement over the annual cycle that had previously made real-time tracking impossible. Better data is the first step toward better policy.
India’s informal economy in 2025 is not a phase that the country is passing through on the way to something else. It is the foundation on which the fourth-largest economy in the world currently rests. The 500 million people inside it are not a footnote to the growth story. They are the growth story. The question that the data keeps asking, and that policy has not yet fully answered, is when their work will come with the same protections that workers in every formal sector already take for granted.
SOURCE LOG
ILO: 82% workforce informal, 90% informally employed: ILO India Employment Report 2024, ilo.org
85% jobs informal, August 2025: Springer Nature, Discover Global Society, August 15, 2025, link.springer.com
45% of GDP from informal sector FY2022-23; 61% women in non-agri informal sector: PIB, MoSPI Consultation on Informal Economy, January 30, 2025, pib.gov.in
e-Shram 27.69 crore workers, 94% under Rs 10,000/month, 74% SC/ST/OBC: e-Shram portal data 2024; Drishti IAS; PIB January 2025
62% agri workers, 70% construction workers below minimum wage: ILO India Employment Report 2024, ilo.org
EPFO 139.78 lakh new subscribers FY25; 7 crore formal transitions: Quess Corp Workforce Trends Report, Business Standard, September 8, 2025
Social protection doubled 24.4% to 48.8%: ILO World Social Protection Report 2024-26
Monthly PLFS and quarterly informal GDP estimates from January 2025: PIB MoSPI Consultation, January 30, 2025, pib.gov.in
