{"id":1473,"date":"2019-10-18T11:20:16","date_gmt":"2019-10-18T11:20:16","guid":{"rendered":"https:\/\/idronline.org\/2020\/12\/23\/the-stark-reality-of-self-employment\/"},"modified":"2025-11-10T10:33:07","modified_gmt":"2025-11-10T05:03:07","slug":"the-stark-reality-of-self-employment","status":"publish","type":"post","link":"https:\/\/idronline.org\/kn-in\/the-stark-reality-of-self-employment\/","title":{"rendered":"The stark reality of self-employment"},"content":{"rendered":"

For all of independent India’s recorded history, a majority of the workforce in the country has been self-employed. However, it is only in the past few years that self-employment has been touted as an answer to India’s employment challenge.<\/p>

India’s previous (interim) finance minister, Piyush Goyal, even claimed<\/a> that job losses are a good sign, as today’s youth prefer to be job creators rather than job seekers<\/a>. Prime Minister Narendra Modi famously referred to pakoda sellers when an interviewer asked him about job creation in the economy ahead of the 2019 Lok Sabha polls.<\/p>

Only 4% of the self-employed are job-creators while the rest run small enterprises.<\/p><\/blockquote>

Till the Periodic Labour Force Survey (PLFS)<\/a> of 2017-18, official employment data did not capture earnings of the self-employed. The PLFS for the first time has captured such earnings and the picture isn’t pretty. Most of India’s self-employed are not job creators, contrary to claims made by several ministers over the past few years, and have poor earnings.<\/p>

\"What<\/a><\/div>

As much as 70% of the self-employed were own account workers, an official categorization of self-employed workers who run their own establishment or enterprise (with or without partners) without hiring any worker, while 26% were unpaid helpers who assist household members in running their enterprise, but do not receive any regular wage or salary. Only 4% of the self-employed were employers (who run their enterprise by hiring workers).<\/p>

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Source: Authors’ calculations using PLFS 2017-18 unit-level data<\/p><\/div>\n<\/p>

The latest data has a silver lining though. Between 2011-12 and 2017-18, there was a rise in the share of own account workers (7.3 percentage points) and employers (1 percentage point) among the self-employed and a fall in the share of unpaid helpers, which can be considered a positive development. To ensure comparability with the earlier survey, only the data from the first visit of the PLFS has been used here.<\/p>

Related article: Labour market effects of workfare programmes: Evidence from MGNREGA<\/strong><\/a><\/p>

A majority of the self-employed (60%) were engaged in agriculture. Most of those engaged in non-agricultural activities were in trade, manufacturing, transport and storage.<\/p>

The data showed that motor vehicle drivers were among the better-paid workers within the self-employed with median reported earnings of ₹<\/span>10,000. This includes Uber and Ola drivers, who are captured in official statistics, contrary to what some NITI Aayog officials believe.<\/a><\/p>

\"donate<\/a><\/div>

The median reported earnings of astrologers and fortune-tellers (₹<\/span>8,000) was lower than that of drivers but higher than that of food processing workers (₹<\/span>2,500), textiles and garments workers (₹<\/span>5,500), and street vendors (₹<\/span>7,000). It is worth noting that these earnings are self-reported and hence may suffer from under-reporting.<\/p>

\"\"<\/p>

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Source: Authors’ calculations using PLFS 2017-18 unit-level data<\/p><\/div>\n<\/p>

The median reported earnings of own-account workers was ₹<\/span>8,000 per month, while that of employers was almost double at ₹<\/span>15,000.<\/p>

However, as noted earlier, employers constitute a very small proportion of the self-employed. The median monthly earnings for all self-employed workers was ₹<\/span>8,000. This is lower than the median earnings of regular workers in the country.<\/a><\/p>

Only about 10% of the self-employed reported earnings more than ₹<\/span>20,000 per month and only about 1% reported earnings more than ₹<\/span>50,000 per month.<\/p>

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Source: Authors’ calculations using PLFS 2017-18 unit-level data<\/p><\/div>\n<\/p>

Median earnings from self-employment was 1.5 times higher in urban areas than in rural. More striking is the gender earnings gap in self-employment—the median earnings of men was 2.5 times higher than that of women.
\nRelated article: The missing women in finance<\/a><\/strong>
\nThe median monthly earnings of self-employed women was ₹<\/span>3,000 in rural areas and ₹<\/span>4,000 in urban areas. This was lower than the earnings of casual women workers in both these areas. A whopping 65% of women engaged in self-employment earned less than ₹<\/span>5,000 per month, and 90% had monthly earnings of less than ₹<\/span>10,000.<\/p>

More than half of Indian workers are engaged in self-employment and most of them operate on a very small scale as unpaid helpers in their family enterprises.<\/p><\/blockquote>

This is partly driven by the skewed gender pattern of self-employment. The categories of own account workers and employers, who are largely responsible for decision making, were dominated by men whereas women were a majority among unpaid helpers.<\/p>

The share of the self-employed in the workforce remained stagnant between 2011-12 and 2017-18 at 52.2%, the data showed. However, the workforce itself shrank over this period, and the share of the self-employed in the total population declined by 2 percentage points. Among major states, the shares of the self-employed in the workforce was high among some of India’s poorest states: Chhattisgarh (66%), Rajasthan (65%), Uttar Pradesh (64%), and Jharkhand (61%).<\/p>

\n

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Source: Authors’ calculations using PLFS 2017-18 unit-level data<\/p><\/div>\n<\/p>

In contrast, the shares of the self-employed were relatively lower in some of India’s most prosperous states: Tamil Nadu (33%), Kerala (38%), Haryana (44%), and Andhra Pradesh (45%).<\/p>

Most self-employed enterprises (89%) were small ones, with less than six workers (hired or family members). Only about 3% of enterprises had more than 10 workers.<\/p>

On the whole, more than half of Indian workers are engaged in self-employment and most of these self-employed workers operate on a very small scale without hiring workers or as unpaid helpers in their family enterprises.<\/p>

The average reported earnings of the self-employed, particularly the women among them, is extremely low. This large section of the workforce is also bereft of job security.<\/p>

The data shows that India’s self-employed are a precarious and vulnerable lot. The job creators among the self-employed are few and far between.<\/p>

This was originally published on Livemint. You can read it here<\/a>.<\/em><\/p>\n

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