Lok Sabha Question No. 5811 (UNSTARRED), answered on 2026-03-30
Subject: Growing Informality in Services Sector
Ministry: LABOUR AND EMPLOYMENT
Asked by: Adv K. Francis George

## GOVERNMENT OF INDIA

## MINISTRY OF LABOUR AND EMPLOYMENT LOK SABHA

## UNSTARRED QUESTION NO. 5811

TO BE ANSWERED ON 30 TH  MARCH, 2026

## GROWING INFORMALITY IN SERVICES SECTOR

## 5811.      ADV K. FRANCIS GEORGE:

Will the Minister of LABOUR AND EMPLOYMENT be pleased to state:

- (a) whether the Government has taken any note of increasing informality and low-wage employment trends in the services sector and if so, the details thereof;
- (b) the  details  of  employment  trends  in  the  services  sector  in  the country  during  the  last  five  years  and  the  current  year,  year-wise, including formal and informal employment distribution;
- (c) whether  any  assessment  has  been  conducted  by  the  Government regarding risks of a low-wage employment trap and sectoral productivity disparities and if so, the findings thereof;
- (d) the  details  of  steps  taken  by  the  Government  to  expand  social security  coverage,  skill  development  and  formalisation  of  service sector employment; and
- (e) the details of measures proposed to strengthen by the Government linkages between manufacturing and services to ensure sustainable employment growth?

## ANSWER

## MINISTER OF STATE FOR LABOUR AND EMPLOYMENT (SUSHRI SHOBHA KARANDLAJE)

(a) to (e):   The KLEMS (K: Capital, L: Labour, E: Energy, M: Materials and S: Services) database published by Reserve Bank of India's (RBI) which covers 27  industries  comprising  of  the  entire  Indian  economy  and  provides employment  estimates  across  27  industries.  As  per  the  latest  data,  the number  of  persons  engaged  in  services  sector  has  increased  from  16.2 crores in 2017-18 to 20.15 crores in 2022-23. Also, in manufacturing sector from 5.47 crores to 6.3 crores during the same period. The year-wise details may be seen at https://rbi.org.in/Scripts/KLEMS.aspx.

The  official  data  on  Employment  and  Unemployment  is  collected through  Periodic  Labour  Force  Survey  (PLFS)  which  is  conducted  by  the

Ministry  of  Statistics  and  Programme  Implementation (MoSPI) since 201718.

As per the latest available Annual PLFS reports, the estimated Worker Population Ratio (WPR), indicating employment  (including formal and informal sector) has increased from 46.8% in 2017-18 to 58.2% in 2023-24.

Further, more than 8.23 crore net subscribers have joined Employees' Provident Fund Organization (EPFO) between September 2017 and July 2025 indicating increase in employment and formalization of the job market. Also, more  than  1.29  crore  net  subscribers  have  joined  EPFO  during  the  year 2024-25.

To promote formalisation of the workforce, the Occupational Safety, Health and Working Conditions Code, 2020 provides for mandatory issuance of  appointment  letters  to  employees.  The  Code  on  Social  Security,  2020 expands social security coverage by extending Employees' State Insurance Corporation coverage pan-India, allowing voluntary coverage for establishments with less than 10 employees, and mandating coverage even for establishments with a single employee engaged in hazardous processes. The  coverage  under  the  Employees'  Provident  Fund  Organisation  now applies  to  all  establishments  employing  20  or  more  employees,  with  the earlier schedulebased restriction removed. Further, the Employees' Enrolment  Scheme  (EES)  of  EPFO  provides  a  time-bound  opportunity  for employers  to  bring  left-out  employees  under  the  fold  of  social  security, thereby ensuring their formalization.

Under the Government of India's Skill India Mission (SIM), the Ministry of Skill Development and Entrepreneurship (MSDE) delivers skill, re-skill and up-skill training through an extensive network of skill development centres under various schemes, viz. Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Jan Shikshan Sansthan (JSS), National Apprenticeship Promotion Scheme (NAPS)  and  Craftsmen  Training  Scheme  (CTS)  through  Industrial  Training Institutes (ITIs), across the country. The SIM aims at enabling youth of India to get future ready and equipped with industry relevant skills.

In  addition,  the  Government  is  implementing  Employment  Linked Incentive (ELI) Scheme named as the Pradhan Mantri Viksit Bharat Rozgar Yojana  to  support  employment  generation,  enhance  employability  and social security across all sectors, with special focus on the manufacturing sector. The scheme with an outlay of Rs 99,446 Crore aims to incentivize the creation of more than 3.5 Crore jobs in the country, over a period of 2 years.

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