When you accept an employment in any organisation, you have to perform various jobs as per the requirements of your employer and you may get a fixed amount of income as salary. But, instead of seeking a job, you can also opt to do something on your own to earn your livelihood.
You may run a small retail shop, tailoring shop, restaurant, bakery and confectionery, beauty saloon, etc. in your locality. In other words, you may get engaged in trading or manufacturing on a small scale or providing some service for a price. Such economic activities are known as self-employment.
Earning is necessary for a living. Your father, mother, brothers, sisters and others may be engaged in different economic activities through which they earn their livelihood. Possibly some of them may be working for others in factories, shops, agricultural field, etc. and get a fixed amount from their employers for the service rendered by them. These persons are engaged in an economic activity which is termed as wage employment or paid employment.
But there are many persons who engage themselves in one occupation or some business which they start and manage on their own. They put in their best effort and take all types of risks to pursue their careers successfully. The entire earning of their work goes to them. For example, small grocery shops, tailoring shops, medical stores, are owned and managed by a person, with or without the help of some assistants. Their economic activities are termed as self-employment. So when an individual engages in any economic activity and manages it on his own, it is known as self-employment.
Characteristics of Self-Employment
Following are the characteristics of self-employment:
Self-employment involves doing something on one’s own to earn one’s livelihood.
It involves ownership and management of activities by a person although he or she may take the help of one or two persons to assist him or her. Thus, self-employment may provide employment to other persons as well.
The earning from self-employment is not fixed. It depends on the income one can earn by producing or buying and selling goods or providing services to others at a price.
In self-employment, the owner alone has to take the profit and bear the risk of loss. So, we find a direct link between the effort and reward in self-employment.
It requires some amount of capital investment, although it may be small.
In self-employment, a person is free to take decisions in respect of running his business profitably and avail of any opportunity that may come up for expansion of his business. It gives complete freedom to work as per one’s own will and within the parameters of the prevailing laws.
Thus, self-employment may be defined as, an economic activity which one may perform on his own as a gainful occupation, and this may consist of producing and selling goods, buying and selling goods, or rendering services for a price.