Services sector jobs risk falling into 'low-wage trap'

Informality and poor pay still define India's largest employer, says NITI Aayog report

- SHIVA RAJORA

Notwithstanding the centrality of the services sector in the Indian economy, jobs in the sector remain “overwhelmingly informal”, with most workers lacking job security or social protection — creating a “low-wage trap” even as it remains the fastest-growing part of the economy, NITI Aayog observed in its latest report released on Tuesday.

“Despite the centrality of services in India's economic structure, the sector continues to be marked by high levels of informality, as the majority of workers lack access to job security or social protection. Services risk becoming a low-wage trap despite being the fastest-growing part of the economy,” said the report titled India’s Services Sector: Insights from Employment Trends.

In 2023-24, the services sector employed nearly 188 million workers, adding close to 40 million jobs over the past six years. The sector has absorbed labour at scale and shown resilience in the face of the Covid-19 pandemic. As a share of total employment, it rose to 29.7 percent in 2023-24 from 26.9 per cent in 2011-12.