India’s Services Sector: Insights from Employment Trends

Why in news?

Recently, NITI Aayog has launched the report on “India’s Services Sector: Insights from Employment trends and State-Level Dynamics”.

• Released by – NITI Aayog.
• The report is India’s 1^st comprehensive study of employment in the services sector.
• It analysis across sub-sectors, gender, regions, education levels, and job types—moving beyond aggregate trends to present a multi-dimensional workforce profile.

Key findings of the report

• Slow service sector growth – Employment grew from 22.1% in 1992 to 31.0% in 2022, an increase of 8.9 %, much below the global average - citing World Bank figures.
• Expansion of employment share – The service sector’s share in total employment in India rose to 29.7 % in 2023–24 from 26.9 % in 2011–12.
• Sector wise employment growth (in 2023-24) – Agriculture remains the largest employing sector (292 million) followed by Services (188 million) & Industry (153 million).
• Gender gap – In 2017-2024,
  • Male participation increased from 32.8% to 34.9%,
  • Female participation declined from 25.2% to 20.1%.
  • Agriculture – Increasingly female-dominated, rising from 57.0% to 64.4%, while men’s share fell from 40.2% to 36.3%.
• Rural-urban divide –
  • Share of services –In 2017-24, rural employment declined from 19.9% to 18.9%,  urban areas increased from 59.1% to 60.8%.
  • In urban areas – 61% of men are employed, while 60% of women are employed.
  • In  rural areas – 24% of men are employed, while 10.5% of women making up just 10.5%.
• Job type – In 2023-24, 51% (96 million) of workers in service sector are employed in regular wage/salaried roles, whereas, 45% (85 million) were self-employed.
• Under-representation of youth – Pointing to barriers to entry into regular wage work, insufficient skilling, poor job readiness, and weak school-to-work transitions.
• Share of older workers [45+ years] – Declines sharply in regular wage jobs – 10% in the 55–59 group to just 1% beyond age 65, only a small fraction continues in self-employment.
• Sector’s dual character –
  • Modern & high-productivity segments (IT, finance, healthcare, professional services) that are globally competitive yet limited in employment intensity;
  • Traditional segments (trade & transport, etc.) that absorb large numbers of workers but remain predominantly informal and low-paying.
• Creating a “low-wage trap” – Despite, being the fastest-growing part of the economy, jobs in the service sector remains highly informal, with most workers lacking job security or social protection.

References

1. The Hindu | NTI Aayog: Uneven job growth in service sector
2. Business Standard | 'Low-wage job trap' in service sector