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India's services sector employs close to 30% of the nation's workforce. This was found to be lower than the global average of 50%, showing a slower structural transition, NITI Aayog said in a report on Tuesday.The report, titled 'India's Services Sector: Insights from Employment Trends and State-Level Dynamics', also said that the services remain the centrepiece of India's employment growth and post-pandemic recovery, but still faced roadblocks."Services employment rose to 29.7% in 2023-24 compared to 26.9% in 2011-12 with 40 million jobs created in the last six years," the Aayog said."However, it still lags the global average of 50 per cent, reflecting a slower structural transition," it said, suggesting the requirement for structural reforms, expediting social protection, digital conversion of informal worker registration and formalising care services to push forward formal employment in the services sector.The report stated that while services made up more than half of national output, they consisted of less than a third of jobs, most of which are informal and pay less.."This disconnect between growth and employment defines the central challenge for India's services-led development," it said. It said over 60% of urban workers employed in services compared to less than 20% in rural areas."Gender divides remain striking: only 10.5% of rural women are engaged in services compared to 60% of their urban counterparts, and their participation is largely confined to low-value activities," the report said.According to the report, India faces a growing mismatch: education levels are rising faster than the quality-of-service jobs, underscoring the urgency of aligning skilling with sector needs."Retail trade and transport dominate services jobs in large states, sustaining employment but at low productivity levels," the report said, adding that modern services (IT, finance, professional services) are booming in southern and western hubs, driving growth but absorbing fewer workers..The report pointed out that while states such as Maharashtra, Tamil Nadu, Karnataka, and Telangana have built vibrant service hubs with high productivity, Bihar, Madhya Pradesh, and others remain concentrated in low-value, traditional segments."Employment generation is uneven across sub-sectors, informality remains widespread, and job quality continues to lag behind output growth," it said.To bridge these gaps, the report outlines a four-part policy roadmap focusing on formalisation and social protection for gig, self-employed, and MSME workers; targeted skilling and digital access to expand opportunities for women and rural youth; investment in emerging and green economy skills; and balanced regional development through service hubs in Tier-II and Tier-III cities..This report is among the first dedicated assessments of employment in the services sector, going beyond aggregate trends to present a disaggregated and multi-dimensional profile of the services workforce. By linking historical insights from the NSS 68th Round (2011-12) with the latest PLFS data (2017-18 to 2023-24), it provides a long-run perspective on structural shifts. In doing so, it offers a comprehensive understanding of the sector's employment landscape and its implications for inclusive growth..In another report titled 'India's Services Sector: Insights from GVA Trends and State-Level Dynamics', also released on Tuesday, the Aayog said that the services sector has become the cornerstone of India's economic growth, contributing nearly 55% of national gross value added (GVA) in 2024-25, up from 51% in 2013-14."While inter-state disparities in services sector shares have modestly widened, there is clear evidence that structurally lagging states are beginning to catch up," it said..The report said this emerging pattern of convergence suggests that India's services-led transformation is gradually becoming more broad-based and spatially inclusive.At the sectoral level, the report recommended prioritizing digital infrastructure, logistics, innovation, finance and skilling to accelerate diversification and competitiveness.At the state level, it called for developing tailored service strategies based on local strengths, improving institutional capacity, integrating services with industrial ecosystems, and scaling up urban and regional service clusters.(With PTI Inputs).Intense, But Productive: Piyush Goyal Wraps Up Brussels Talks As EU FTA Nears 'Fruition
