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India’s jobless growth in services

LiveMint logoLiveMint 14-08-2017 Livemint

The accompanying chart, taken from Volume 2 of the Economic Survey published last week, shows the wide gap between the share of the services sector in India in the economy and its share of total employment.

The chart also shows that India is an outlier in this respect—in most other economies the share of services in gross value added is more or less similar to its share in total employment.

For example, in Brazil the share of services in the economy is 72%, while its share of employment is 68.9%.

For India, the share of the services sector in GVA is 53.2%, while its share of total employment is much less, at 28.6%. Note that the construction sector has not been included in services.

The services sector in India remains the most dynamic one and growth is very high, but that growth is not matched by commensurate growth in employment.

The Economic Survey says, “Among the top 15 services producer countries, the services sector accounts for more than two-thirds of total employment in 2016 in most of them except India, China and Mexico where the shares are low. India has the lowest share of 28.6%. Of the 15 countries, in the last 15-year period between 2001 and 2016, China had the highest increase in the share of services employment (14.7 percentage points) while for India, the increase was by only 4.6 percentage points.”

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