Abstract:
This is a study of employment growth, structure, and job quality outcomes in manufacturing and
service-sector in urban India spanning the period 1999-2000 to 2009-10. The context is that of dynamic
growth of service-sector in India beginning in the 1990s. This has raised the question whether India will
skip the traditional sequence of agriculture to manufacturing with services taking up the leading sector
role in India’s growth path. We studied employment growth and related aspects of employment structure
using the NSS surveys of employment and unemployment carried out in 1999-2000 and 2009-10 with a
view to throw more light on the future role of manufacturing and services as providers of employment to
large numbers joining the labour force. We did not find any acceleration in the service-sector
employment growth relative to manufacturing in the urban areas of India. The good news is that young
males have increased their share of regular employment both in manufacturing and services. However,
we find greater duality in services sector in terms of the incidence of informality and wage inequality. In
the service-sector those with more skills have received higher increases in real wage. The service-sector
is relatively more skill demanding than manufacturing. We showed that skill composition of the
workforce is markedly different between the two sectors with services clearly skill biased. Social
security conditions are not found to be relatively much superior in services. Our results strongly suggest
that service-sector is an unlikely destination for the millions of low skilled job seekers. India needs to
focus on manufacturing sector to provide large scale employment.
