Unincorporated sector employment down 2% in Q1FY26 on seasonal trend

The number of workers across rural and urban unincorporated enterprises fell to 128.6 million in April-June 2025 from an all-time high of 131.3 million in January-March 2025

Employment in India’s unincorporated non-agricultural sector dipped by 2.1 per cent sequentially in the first quarter of the financial year 2026 (Q1FY26) even as the total number of establishments saw a slight increase, the government said on Wednesday.

 

According to the National Statistical Office’s (NSO’s) new Quarterly Bulletin of Unincorporated Sector Enterprises (QBUSE), the number of workers across rural and urban unincorporated enterprises fell to 128.6 million in Q1FY26 from an all-time high of 131.3 million in Q4FY25. 

Pronab Sen, the chairman of the Indian Statistical Institute (ISI), attributed the fall largely to seasonal patterns in informal employment pointing that firms typically hire additional workers on a temporary basis during peak seasons, letting them go once demand subsides.

 

“The last quarter of the financial year usually is a peak quarter and the first quarter of the subsequent year is also pretty high, but not as high with the second quarter slowing even further,” Sen said.

 

In contrast, the number of establishments in the sector continued to rise. Total establishments were estimated at 79.4 million in Q1FY26, up from 78.5 million in previous quarter, and well above the 73.4 million units reported for 2023-24. 

 

Unincorporated enterprises refer to business entities that are not legally registered under the Companies Act, 1956, or under the Companies Act, 2013. These enterprises typically include small businesses, sole proprietorships, partnerships, and informal-sector businesses. The QBUSE, released for the first time this year, provides quarterly estimates to supplement the annual survey of unincorporated enterprises.

 

The bulletin also noted minor fluctuations in the composition of the workforce, with the share of hired workers dropping from 26.86 per cent to 24.38 per cent between the two quarters, even as working owners accounted for a higher percentage of total employment in April-June 2025.

 

Rural employment expanded to 62.5 million workers from 59.7 million in Q1FY26, even as urban employment declined.

 

At the activity level, “other services” remained the largest employer, accounting for 40 per cent of total jobs, followed by trade (34 per cent) and manufacturing (26 per cent). Notably, manufacturing jobs slipped from 36.9 million to 33.5 million between the two quarters, while trade and services held steady.

 

Women workers remained over 28 per cent of the workforce in both quarters, and digital adoption in establishments ticked up, though the proportion of registered units dipped marginally from 36 per cent to 35 per cent.