Informal sector pay rose just 4% in 2025, 32% fewer jobs added
While retail inflation was much lower in 2025, the rise in informal sector pay last year is less than half than that seen in the formal sector.
Pay in India’s informal sector rose by just 3.9% in 2025, less than half the 13% increase seen in 2023-24 (October-September), according to the results of a new government survey released Tuesday. At the same time, the sector saw a sharp reduction in the number of jobs it added, likely due to the number of establishments also growing at a slower pace.
As per the Ministry of Statistics and Programme Implementation’s (MoSPI) Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2025, the unorganised sector saw total pay – inclusive of employer’s contribution to canteen, health clinic, child care centre, etc – for hired workers rise to Rs 1.47 lakh in 2025. In rural areas, pay rose 2% in 2025, sharply lower than the 18% growth registered in 2023-24. Meanwhile, the increase in pay in urban areas was 5% in 2025, down from 10% in 2023-24.
India’s unincorporated, non-agricultural enterprises – covered by the ASUSE survey – make up a sizable portion of the economy and include the likes of small manufacturers, service providers, and trading units. “…this segment is instrumental in expanding employment opportunities, promoting grassroots entrepreneurship, and adding to the country’s Gross Domestic Product (GDP),” the statistics ministry said on Tuesday.
The first annual ASUSE survey was conducted in 2021-22 (April-March), with the second one carried out from October 2022 to September 2023. The latest survey is the fourth, with the statistics ministry revising the timeline such that it aligns to the calendar year. The survey has become an important input for measuring the size of the economy, with the revised GDP series having 2022-23 as the base year using ASUSE as well as the Periodic Labour Force Survey to more accurately represent the informal sector.
Informal sector shrinking?
As per the survey data released on Tuesday, unincorporated manufacturing establishments saw 4% increase in pay (down from 16% in 2023-24), trade saw 8% increase (down from 14%), and ‘other services’ 2% (down from 10%).
To be sure, the weaker pay growth also coincided with lower retail inflation. In 2025, Consumer Price Index (CPI) inflation averaged 2.2%, compared to 4.9% in 2023-24 (October-March).
However, the informal sector pay increases are far lower than those in the formal sector. According to data compiled by Reserve Bank of India, staff costs of more than 3,000 non-financial, listed private companies – a proxy for formal sector wage growth – rose by 9.2% in October-December 2025.
The informal sector also saw fewer establishments being added in the last calendar year. In 2023-24, the number of establishments had increased by 83.5 lakh to 7.34 crore. In 2025, this figure declined to 58.5 lakh, with the total number of establishments rising to 7.92 crore. As a result, fewer jobs were created: 74.5 lakh in 2025 compared to 1.1 crore in the 12 months ended September 2024.
In another sign that the informal sector may not have performed as well in 2025 as before, the per worker Gross Value Added (GVA) – or the difference in the value of inputs used and output produced – rose 4.5% in 2025, down from 5.6% in 2023-24.
“The sector also exhibited an upward trend in formalisation,” MoSPI said, adding that 41% of establishments reported in the final quarter of 2025 that they had registered under at least one Act or authority, up from 37% in July-September 2025.
Interestingly, more and more of these unorganised sector establishments are using the internet: 26.7% in 2023-24 to 39.4% in 2025.
Pay in India’s informal sector rose by just 3.9% in 2025, less than half the 13% increase seen in 2023-24 (October-September), according to the results of a new government survey released Tuesday. At the same time, the sector saw a sharp reduction in the number of jobs it added, likely due to the number of establishments also growing at a slower pace.
As per the Ministry of Statistics and Programme Implementation’s (MoSPI) Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2025, the unorganised sector saw total pay – inclusive of employer’s contribution to canteen, health clinic, child care centre, etc – for hired workers rise to Rs 1.47 lakh in 2025. In rural areas, pay rose 2% in 2025, sharply lower than the 18% growth registered in 2023-24. Meanwhile, the increase in pay in urban areas was 5% in 2025, down from 10% in 2023-24.
India’s unincorporated, non-agricultural enterprises – covered by the ASUSE survey – make up a sizable portion of the economy and include the likes of small manufacturers, service providers, and trading units. “…this segment is instrumental in expanding employment opportunities, promoting grassroots entrepreneurship, and adding to the country’s Gross Domestic Product (GDP),” the statistics ministry said on Tuesday.
The first annual ASUSE survey was conducted in 2021-22 (April-March), with the second one carried out from October 2022 to September 2023. The latest survey is the fourth, with the statistics ministry revising the timeline such that it aligns to the calendar year. The survey has become an important input for measuring the size of the economy, with the revised GDP series having 2022-23 as the base year using ASUSE as well as the Periodic Labour Force Survey to more accurately represent the informal sector.
Informal sector shrinking?
As per the survey data released on Tuesday, unincorporated manufacturing establishments saw 4% increase in pay (down from 16% in 2023-24), trade saw 8% increase (down from 14%), and ‘other services’ 2% (down from 10%).
To be sure, the weaker pay growth also coincided with lower retail inflation. In 2025, Consumer Price Index (CPI) inflation averaged 2.2%, compared to 4.9% in 2023-24 (October-March).
However, the informal sector pay increases are far lower than those in the formal sector. According to data compiled by Reserve Bank of India, staff costs of more than 3,000 non-financial, listed private companies – a proxy for formal sector wage growth – rose by 9.2% in October-December 2025.
The informal sector also saw fewer establishments being added in the last calendar year. In 2023-24, the number of establishments had increased by 83.5 lakh to 7.34 crore. In 2025, this figure declined to 58.5 lakh, with the total number of establishments rising to 7.92 crore. As a result, fewer jobs were created: 74.5 lakh in 2025 compared to 1.1 crore in the 12 months ended September 2024.
In another sign that the informal sector may not have performed as well in 2025 as before, the per worker Gross Value Added (GVA) – or the difference in the value of inputs used and output produced – rose 4.5% in 2025, down from 5.6% in 2023-24.
“The sector also exhibited an upward trend in formalisation,” MoSPI said, adding that 41% of establishments reported in the final quarter of 2025 that they had registered under at least one Act or authority, up from 37% in July-September 2025.
Interestingly, more and more of these unorganised sector establishments are using the internet: 26.7% in 2023-24 to 39.4% in 2025.
