Overview of NITI Aayog Report on Employment in the Services Sector
A recent report by NITI Aayog highlights the evolution of employment within India's services sector, which significantly contributes to the country's GDP. The report underscores the sector’s growing role in job creation, with its share in total employment rising from 26.9% in 2011-12 to 29.7% in 2023-24.
Dimensions and Structural Challenges
- The report examines employment profiles across seven dimensions: spatial distribution, gender participation, employment type, age profile, education, informality, and earnings.
- These profiles help identify structural challenges and suggest policy options for enhancing productive and gainful employment.
Formal vs Informal Employment
The report provides insights into formal versus informal employment, especially in the services sector:
- 51% of jobs are regular wage jobs, while 45% are self-employed.
- Informal jobs (regular wage jobs without social security) constitute 69% of the sector.
- Owner-driven and family-based enterprises account for 82.5% of total enterprises.
Elasticity of Employment
The report highlights a post-COVID increase in employment elasticity across agriculture, manufacturing, and services:
- For services, elasticity rose from 0.35 to 0.63.
- Agriculture and manufacturing report elasticities greater than one, indicating a more significant output-employment linkage.
Challenges and Policy Suggestions
- Constraints to Formalisation: Informal enterprises face costs from compliance and a lack of perceived benefits, while formal enterprises may see increased costs from providing social security.
- Expansion in demand might make formalisation more desirable.
- Social security as a government service could reduce costs for formal enterprises.
Artificial Intelligence (AI) Impact
- AI is expected to potentially displace 40-50% of white-collar jobs.
- The demand for AI and big data specialists will rise, but the overall employment impact might be negative.
- Reskilling and upskilling are necessary to leverage emerging opportunities in IT and fintech sectors.
The emphasis is on stimulating both formalisation and resilient employment generation to counter these challenges.
