What is better : Employment or Self-Employment ?

Any work or job which provides financial security to a person, is also important for his/her social integration and overall well-being. The part of population in a society which is willing and able to work constitutes the labour force. This labour force is the manpower behind the economic and social development of the society. Underemployment and unemployment are among the various problems being faced by Indian society and economy. Therefore, a number of government schemes and policies are directed for providing both wage employment and self-employment. Wage employment is a situation where a worker is employed by an entrepreneur, public holding company or the government for which he/she is given wages according to his/her skills. On the other hand, in case of self-employment, a person is the owner of a business, enterprise or profit-making organisation.

Around 51% of Indian workers are self-employed, mostly in rural areas, while 33.5% are casual labour and only 15.6% have salaried employment. However, the nature of work done in self-employment is not contributing much value to society or to workers. As a result, they remain in the low-income bracket. According to a report in Hindustan Times, the share of self-employed persons earning less than Rs. 3000 per month was more than 1 in 5 in urban areas and just under half in rural areas. In India, since Independence, the policies have been skewed in favour of wage employment. Also, the policies in favour of self-employment have failed to take pace as is evident by the above data regarding the per month income of the self-employed.

However, if promoted along with right market conditions, self-employment is the better option to bridge the gap that often arises in government efforts to create quality opportunities in the field of employment. It also helps to tackle the problem of rising unemployment rates and jobless growth more efficiently than wage employment.

Self-employment ensures faster economic growth than wage employment. This is because of various factors. Firstly, it can help transform India into a country of job creators instead of job-seekers. Secondly, it helps attract private investments in those sectors where government intervention has been less; for example, artificial intelligence, blockchain technology, robotics, green technology etc. Thirdly, if you start an export-oriented business it can give a boost to the exports, which can further reduce Current Account Deficit. In addition to these, various social impact start-ups in the field of skill development and women empowerment can help complement the welfare schemes of government in turn accelerating the economic growth. Self-employment enterprises are mainly labour intensive and thus can solve the problem of jobless growth; particularly women-oriented jobless growth. The first self-help group that was given microfinance credit was a women’s SHG under Development of Women and Children in Rural Areas (DWCRA) Scheme. Also, 90% of all SHGs are operated by women as women beneficiaries are more comfortable in self-employment than wage employment.

Start Up India is a flagship initiative of the Government of India intended to build a strong ecosystem that is conducive to the growth of start-ups, to drive sustainable economic growth and generate large-scale employment opportunities. The Start Up India Action Plan envisages several incubation centres, easier patent filing, tax exemption, ease of setting up business, a Rs. 1000 crore corpus fund and a faster exit mechanism among others. Start-ups providing various services like renewable energy, travel and tourism, marketing, design, education, health care etc. are already under different stages.

Self-employment helps to harness the full potential of the labour force. Entrepreneurs explore the methods to gain maximum profit with minimum resources as they are not working for a fixed wage. Thus, any increase in
profit is beneficial to them. It promotes innovation in technology, working methods and design. Thus,
self-employment ensures perfect use of intellectual, manual and skill-based potential of individuals. The efficiency of workforce is a by-product of a revolution in self-confidence. This happens when artisans and other producers no longer feel powerless and see themselves as owners and managers. Wage employment, on the other hand, provides lesser creative freedom and decision-making power. There are lesser incentives for improving one’s performance which leads to lack of use of full potential of the workers.

Self-employment, apart from spurring economic growth, can also help in poverty alleviation and rural development. Most of the poor are involved in informal sector activities and uncertain wage employment where there is a constant threat of eviction, removal, confiscation of goods and almost non-existent social security cover. National Rural Livelihood Mission (NRLM) implemented by the Ministry of Rural Development is a poverty alleviation programme focussed on promoting self-employment and skill enhancement for wage employment. Since there are lesser opportunities of wage employment in rural areas due to lack of enterprises, self-employment is the only viable option to make the rural population self-dependent. The basic idea behind this programme is to organise the poor into Self-Help Groups (SHGs) and make them capable for self-employment. The challenge is to unleash the capabilities to generate meaningful livelihoods and enable them to come out of poverty. An excellent example of such an endeavour is Aajeevika Grameen Express Yojna (AGEY) under National Rural Livelihood Mission (NRLM). Under this, the SHGs will operate road transport service in backward areas. This will help to provide safe, affordable and community-monitored rural transport services to connect remote villages for overall economic development of backward rural areas. This will also provide an additional avenue of livelihood for SHGs.

National Urban Livelihood Mission (NULM) is a similar programme with focus on urban poor households and the urban homeless. It will also address the livelihood concerns of urban street vendors by facilitating access to suitable spaces, institutional credit, social security and skills to the urban street vendors for accessing emerging market opportunities. It promotes self-employment through building strong grassroots-level institutions of the poor and skill enhancement for entrepreneurship.

In spite of all these advantages of self-employment over wage employment, there are certain hurdles in creating an ideal atmosphere for growth of self-employment. The unfair working conditions and lack of jobs, especially in IT sector, has led to a wave of new start-ups. This, in addition to lack of consumer demand and slow economic growth, has led to cut-throat competition among them. Other problems which are faced by enterprises are globalisation, competition from MNCs, lack of credit, lack of post-retirement security etc. But instead of shying away from these problems and inclining towards wage employment, solutions to these must be sought because as explained earlier, only self-employment can assure sustainable growth of economy and development of society as a whole.

Globalisation has very selectively expanded opportunities. Most small producers are left feeling more vulnerable and insecure in the globalised economy. Co-operative societies have played a major role in organising the small producers and providing them with a platform to sell their products and services. Two excellent examples of such co-operative societies in India are Amul and SEWA (Self Employed Women’s Association).

Credit remains another big hurdle. To start an enterprise, business or organisation, starting capital is required. Government subsidies are often not enough for the poor and underprivileged. Thus, credit becomes a prerequisite for self-employment. Traditional bank credit is no more a viable option due to lack of ability and willingness to pay back. The solution to the credit problem can be found in microfinance-based credit. This can be obtained through SHG-Bank linkages or through Micro Finance Institutions (MFI). This will solve the problem of both ability and willingness.

The need of the hour is to change our perception and views about ‘self-employment’. An expert states that an “entrepreneur is someone who is associated with initiative, insight, vision, foresight, fresh thinking, conviction and stamina. In contrast, a self-employed person is anybody who is working for oneself instead of working for a wage or salary in an organisation run by others, which is the case of wage employment.” We thus need to equate our new concept of self-employment with entrepreneurship. India, at present, is battling with a number of issues like poverty, joblessness, slow economic growth, social stigmas, lack of technological developments etc. Self-employment if promoted can definitely help to find novel and creative solutions to these problems. It will empower the people and the society by making them the masters of their fate.  

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