According to the resolution concerning the International Classification of Status in Employment (ICSE), adopted by the Fifteenth International Conference of Labor Statisticians in ILO in January 1993, “Own-account workers are those workers who, working on their own account or with one or more partners, hold the type of job defined as a ‘self-employment job’, and have not engaged on a continuous basis any ‘employees’ to work for them during the reference period. It should be noted that during the reference period the members of this group may have engaged ‘employee’, provided that this is on a non-continuous basis. (The partners may or may not be members of the same family or household)”.
According to the resolution concerning the International Classification of Status in Employment (ICSE), adopted by the Fifteenth International Conference of Labor Statisticians in ILO in January 1993, “Own-account workers are those workers who, working on their own account or with one or more partners, hold the type of job defined as a ‘self-employment job’, and have not engaged on a continuous basis any ‘employees’ to work for them during the reference period. It should be noted that during the reference period the members of this group may have engaged ‘employee’, provided that this is on a non-continuous basis. (The partners may or may not be members of the same family or household)”.
Workers with contractual arrangements of a commercial nature to provide goods or services for or on behalf of another economic unit are not employees of that economic unit, but are dependent on it for organization and execution of the work or for access to the market.
Since these jobs do not fit comfortably into any of the substantive categories in ICSE-93, they are frequently classified as own-account workers or employees. It is difficult to monitor structural change in this important form of employment. This is a challenge for labor statisticians because this type of work focused on workers who are initially identified as self-employed workers, but are dependent on one or a number of small units for their income and for the organization of their work. These own-account workers perform for someone else or who are identified as employees, but are not paid a wage or salary and whose ‘employer’ does not make deductions for taxation or make arrangements for other social contributions and insurance. This is a broader notion of economic dependence whereby the person’s access to the market is dependent on another entity. The examples of dependent contractors include disguised employment arrangements (sham self-employment). There are employers who engage workers on a ‘self-employed’ basis using a commercial contract to avoid the limitations and responsibilities imposed on employers under the prevalent labor laws.
Dr Lubna Shahnaz, an internationally renowned Labor Economist and CEO of Policy Research, Innovation, Development & Education (PRIDE), states that in Pakistan 43 percent or around 10 million out of 24 million labor force in agriculture are own-account workers. According to Labor Force Survey 2017-18, the total employment in the country was 61.7 million out of which 21.5 million or nearly 38 percent were classified as own-account workers. Out of 27 million workers in the informal sector, 11 million or about 42 percent are categorized as own-account workers.
Many weaving mills in Pakistan do not have full time piecing or drawing workers because it is not an everyday full-time job. Thus there are such “contractors” who have many weaving mills on their panel and they visit these units on designated days, perform their task, and register their output and leave. Usually they have one or two assistants (helpers) with them. Another example is the pick-up van drivers who own their vehicles and are engaged to transport the company products. In this example, the company does not have to bear the cost of vehicle maintenance, worry about usage of petrol or diesel, and also the salary, perks and privileges of the driver. Lately, another type of such workers is being used by many companies. Factories have buses, vans, as well as company provided cars and motorcycles for officers and staff members. A vehicle-cleaning contractor is appointed who is responsible for cleaning as well as providing the necessary cleaning and oiling materials. This enables many companies to be least worried about the daily care of vehicles and monitoring usage of cleaning and oiling materials. Moreover, the advent of ride-hailing companies such as Uber or Careem or even Bykea and other gig economy sectors has ensued into a widespread increase in own-account workers.
My experience with own-account workers resulted from my production initiatives in my apparel industry. In early 1986, I decided to manufacture ready-to-wear men’s dress suits and Sherwanis. No one had ventured into this field. This was easier said than done but I wanted to enter this field passionately. The major problem was convincing coat tailors to work in a factory environment. The immediate decision taken was to go on the same route as garment and fabric stores or tailoring shops. The cutting and bundling was done at the factory level and these coat tailors would come once a week to collect the material and trimmings and return with the finished garments after a week. Since the plant is situated in SITE Karachi, it was convenient for tailors from Orangi to come to SITE rather than going to Saddar or Clifton.
This strategy worked fabulously and my company had between 65 and 70 coat own-account tailors which at that time was the highest number in whole of Pakistan. They took advantage of their family members who would assist them in activities related to the task. The positive point for these tailors was that since they were getting pre-cut material alongwith required trimmings, their output increased substantially and they were making more money than before. Moreover, they would work as per their own timetable and were technically not company workers. However, there was the issue of uniformity because each coat was tailored by individuals. Soon, I procured expensive machinery and gradually changed the mindset of these tailors and got them to work in a normal industrial set-up. As an aside, a delegation from Germany once visited the factory and was surprised to see the productivity and efficiency of these tailors.
Nowadays, the pandemic crisis has increased the opportunities for more own-account workers in many sectors. This has enabled many units to revisit their human resource requirements by introducing a hybrid system of on-roll and own-account workers. The sudden increase in minimum wages and the corresponding impact on bonus, leaves, gratuity, etc, the compliance with prescribed Covid SOPs, the ups and down of product demand due to frequently announced lockdowns, and difficulties in convincing workers and staff to get vaccinated have been some factors that hugely motivated employers to depend on an agreement with own-account workers. It is high time that some mode of social protection be introduced for own-account workers. One suggestion is that a small percentage, say 3 percent of minimum wage, could be contributed by the principal employer towards social security and EOBI so that these workers are covered and could become eligible for benefits under these social protection schemes. The pandemic crisis has resulted in a New Normal and it is here to stay. However, the American artist Andy Warhol rightly stated that “They always say time changes things, but you actually have to change them yourself”.
The writer is former president Employers Federation of Pakistan
