4.2 - Sector shifts and informal work

Comparing the UK and India

A country profile provides context for a sector shift; it does not explain every household's experience. Pearson defines a developed country by very high human development and an emerging country by medium or high human development. In the UNDP 2025 report, using 2023 data, UK HDI was 0.946 and India's 0.685: very high and medium respectively. These are national categories, not descriptions of every place or person.

Sources: ONS long-term employment study, 2019; India's Economic Survey 2024–25, published January 2025. The measures and reference years differ and must not be treated as a matched employment comparison.

Gross value added measures value produced after subtracting intermediate inputs. Employment measures workers. A high-output software industry can employ fewer people than low-productivity farming, so rising service output need not mean equally rapid absorption of agricultural workers.

For a useful comparison, ask: which measure, date, unit and geographical area does each figure describe? Then add evidence about earnings, skills, environment and access. National growth can coexist with local disadvantage.

The UK's shift towards services

The UK became more service-dominated as agricultural and manufacturing productivity increased, some production faced international competition, and demand for services grew. These processes overlap: falling manufacturing employment does not necessarily mean an equal fall in manufactured output.

Growth in finance, professional services, research, education and healthcare can create skilled jobs and new business opportunities. Firms buy services from other firms, supporting further employment. A former industrial site can be reused for offices, homes or cultural activity, reducing dereliction and diversifying a local economy.

The gains are uneven. Workers losing an industrial job may not have the qualifications, transport or resources needed for a new service job elsewhere. A factory closure can reduce household spending, weakening shops and other suppliers. Vacant buildings and reduced local tax revenue can make recovery harder. Retraining and investment take time, while some new service jobs are insecure or low paid.

Environmental effects also need a geographical boundary. Closing a polluting industrial plant may improve local air, but importing the same goods can move production emissions abroad. Growth in logistics, offices and commuting still consumes energy and land. A stronger judgement therefore considers both local environmental change and the wider consumption footprint.

India's changing opportunities and inequalities

India combines a large farming economy with manufacturing and globally connected services. The Economic Survey 2024–25 reported India's 4.3% share of world service exports in 2023, illustrating the importance of services such as information technology and business support. This does not mean all Indian workers can obtain these jobs.

Moving into more productive manufacturing or services can raise earnings and tax revenue. Export firms can bring investment, training and demand for suppliers. A worker's income can support education, healthcare and rural relatives through remittances. New industries can also reduce dependence on a single crop or a seasonal harvest.

Access is unequal. Specialist service work may require education, English-language or technical skills and reliable digital connections. Rural workers with fewer qualifications may enter low-paid construction, transport or casual work instead. Investment clustered in cities can widen regional inequalities, while rapid development increases pressure on housing, water and transport.

Manufacturing and construction can create jobs but also impose air, water and waste costs where controls are weak. Mechanised production can expand output without creating enough jobs for everyone seeking work. Urban growth is therefore not proof that informal employment will disappear.

A defensible comparison identifies who gains, who loses, where and over what time. The UK's long-established service economy and India's expanding service exports both create opportunity, but their labour markets, infrastructure and starting conditions differ. Neither “sector change is good” nor “industry destroys jobs” explains these differences.