Kerala continues to emerge as one of India’s most service-driven labour markets. Nearly half of its workforce are employed in the service sector, according to a recent NITI Aayog report.
The study, India’s Services Sector: Insights from Employment Trends and State-Level Dynamics based on data from the Periodic Labour Force Survey (PLFS), shows that 48.5% of Kerala’s workforce was engaged in services as of 2023-24. This marked a significant rise from 42.6% in 2011-12 and far above the national average of 29.7%.
As a result, Kerala has been ranked among the top performers in the country, alongside Union Territories like Chandigarh (77.9%) and Delhi (71%), and States such as Goa (59.1%) Mizoram (49.6%).
Balanced gender participation
Unlike many States where services are largely urban-centric, Kerala shows relatively balanced participation. The report highlights that 40% of the State’s rural workforce and 58.6% of its urban workforce are engaged in services. Moreover, in an indication of balanced gender participation, the study also found that the service sector had an employment share of 49.3% males and 47.3% females.
In terms of sub-sectors, the State’s services employment is still anchored in traditional segments. Wholesale and retail trade accounts for the largest share at 31.8%, followed by transportation and storage (12%), education (8.9%), and accommodation and food services (8.3%). Health services and social work accounted for 7.2% of services employment.
While southern States such as Karnataka and Telangana are known for high technology-driven services, the report says that Kerala follows a different trajectory. The State’s service sector’s expansion is more labour-intensive and rooted in education, health-care trade, and tourism.
Among the proposed State-specific strategies to sustain and expand services employment, the NITI Aayog study recommends leveraging Kerala’s global reputation in Ayurveda and ecotourism by upgrading facilities and training hospitality staff.
It also highlights the need to strengthen innovation hubs at the IT parks in Thiruvananthapuram and Kochi, particularly in emerging areas like artificial intelligence and fintech. It also suggests scaling up training in the edtech sector, digital content development, and software services.
Published – December 07, 2025 04:52 pm IST
