Own-Account Work

Own-account work is self-employment in which a person runs their own business, alone or with unpaid partners, without regularly employing anyone else. Own-account workers include market traders, taxi and motorcycle-taxi drivers, small farmers, tailors, repair technicians, home-based producers and many freelance professionals. They earn a profit or fee from what they sell rather than a wage from an employer.

The term is a category in the international classification of status in employment maintained by the International Labour Organization (ILO). It is separate from being an employer, which means hiring staff, and from being an independent contractor in a legal sense, a label that depends on national law. Own-account work is closely linked to the informal economy, since in many developing countries most own-account businesses are unregistered.

Picture a woman who sells vegetables from a stall. She buys stock at dawn, sets her own prices, keeps whatever is left after costs, and decides when to open and close. Nobody pays her a salary and she pays nobody else one. If she hired an assistant every day, she would become an employer; if she worked at someone else's stall for a fixed daily wage, she would be an employee.

That middle position, being your own boss with no staff, is own-account work. It offers freedom and a way to earn when salaried jobs are scarce, but it also means carrying all the risk alone. A slow week, a broken tool or an illness hits income directly, with no employer to share the cost.

Under the International Classification of Status in Employment adopted in 1993 (ICSE-93), own-account workers were one of six groups, alongside employees, employers, members of producers' cooperatives, contributing family workers and workers not classifiable by status. Its successor, ICSE-18, adopted by the 20th International Conference of Labour Statisticians in October 2018, expanded the scheme to ten categories organized in five broader groups:

• Independent workers with employees, who are employers.
• Independent workers without employees, which includes own-account workers in household market enterprises and owner-operators of corporations who have no employees.
• Dependent contractors, who have commercial contracts but depend on another business for access to work or for setting prices.
• Employees, who work for pay under an employment relationship.
• Contributing family workers, who help in a business run by a relative.

The new dependent contractor category was created largely because many people classed as own-account workers, including some drivers and delivery riders in the gig economy, in practice depend on a single platform or client.

Labour force surveys report own-account work as a share of total employment:

For example, if a survey counts 9.4 million employed people and 3.1 million of them are own-account workers, the share is $3.1 \div 9.4 \times 100 \approx 33.0\%$. The ILO adds own-account workers to contributing family workers to form its indicator of vulnerable employment, on the reasoning that both groups are less likely to have formal work arrangements, savings or social protection. Shares tend to be highest in low-income countries with large agricultural sectors and lowest in high-income economies dominated by wage employment.

Own-account workers are counted as being in informal employment when their business is informal, for example when it is not registered or does not keep complete accounts. In many low- and middle-income economies that describes the large majority of them, and their output forms a significant part of the unobserved economy that statisticians must estimate. In high-income countries own-account workers are more often registered sole traders or freelancers who file tax returns and may pay into public pension schemes, although they still tend to have weaker protection than employees.

Moving such businesses into the formal system, a process known as formalization, is a policy goal in many countries. Simplified tax regimes, low-cost registration and voluntary social security schemes for the self-employed are common tools.

• Irregular income. Earnings rise and fall with sales, seasons and health, so own-account workers need ways to save in good weeks and smooth spending in bad ones.
• Working capital. Many need small, short-term loans to buy stock, but without payslips or a credit score they are often refused by banks and turn to suppliers, savings groups or informal lenders.
• Payments. Accepting digital payments, including mobile money in much of Africa and South Asia, creates a transaction history that can later support access to credit and insurance.
• Identity and registration. A recognized digital identity is often required before a worker can open an account, register a business or receive government support.
• Retirement and risk. Without an employer, there is no automatic pension contribution or sick pay, so protection depends on voluntary schemes that many cannot afford.

These needs make own-account workers a core target group for financial inclusion programmes and for lenders serving micro and small enterprises.

• International Labour Organization
• ILOSTAT, the ILO's statistics database