According to the UN Trade and Development Report 2010 despite the accelerating growth rate of the Indian economy, problems related to employment still persist.
The opportunities created by the massive growth in modern services such as information technology (IT), communication and financial services seem to have not had a positive impact on the employment scenario.
''This reflects an increase in labour productivity, which makes India's growth trajectory in services more positive in terms of productivity, though less positive in terms of unemployment and underemployment in a labour-surplus economy,'' the report stated.
The IT and ITeS services growth was accentuated on the back of export services boom positively impacting the country's balance of payments position. The report said while services sector dominated the country's growth trajectory only half of it consists of modern services.
''It is, therefore, necessary that productivity and incomes grow not only in the modern but also in the traditional sectors. This can be achieved by establishing linkages between the two sectors, including the latter in supply chains, increasing the prices of agricultural products and using tax revenue perceived in the modern sector for redistribution policies,'' the UN said.
The report said that despite the expansion in services, employment remained stagnant and while the sector contributed to around 50 per cent of the GDP in 2004-05, it employed 25 per cent of the work force.