NITI Aayog Report: Services Jobs Grow but Stay Informal
Why in the news
A NITI Aayog report on services-sector jobs found that the sector leads in GDP share and has added employment since COVID, yet most of that growth remains informal and insecure.
Key figures
| Indicator | Value |
|---|---|
| Share in total employment | 26.9% (2011-12) to 29.7% (2023-24) |
| Workers in services | Nearly 188 million |
| Employment elasticity | 0.35 to 0.63 after COVID (still below 1) |
| Regular wage jobs / self-employed | 51% / 45% |
| Informal share (counting wage jobs without social security) | 69% |
| Owner-driven and family enterprises | 82.5% of all enterprises |
Key facts
- Services contribute the largest share of GDP.
- Employment elasticity means job growth relative to output growth.
- The “informal trap” reflects weak formalisation, poor social protection and limited upward mobility.
Concerns
- Informal firms face higher compliance and tax costs without quick benefits.
- Formal firms face higher long-term labour costs if social security is extended.
- A large low-skilled pool weakens bargaining power and keeps informality stable.
- AI may displace 40-50% of white-collar jobs, especially in IT and fintech; net employment effect likely negative and could push workers to the informal economy without reskilling.
Way forward
- Stronger formalisation frameworks with social security for informal workers.
- Demand-led growth through targeted transfers to low-income households, especially women.
- Treat social security as a public service; broaden the income-tax base and rationalise exemptions to pay for it.
- Add AI and digital literacy to skilling.
- Simplified compliance and fiscal incentives for micro and small firms.
- Launch the proposed Annual Survey of Service Sector Enterprises.
Exam angle
- Report by NITI Aayog on services employment.
- Services’ employment share: 29.7% in 2023-24.
- Elasticity: 0.63 post-COVID.