Self-employed workers often have fewer opportunities to take on complex tasks and learn from colleagues because they typically work alone, the World Bank says
New Delhi: Workers who are self-employed experience slower growth in earnings with accumulated work experience compared with those in wage employment, according to the World Bank.
The World Bank has noted that earnings increase by around 3.8% after five years of experience for self-employed workers, compared with 6.5% for workers in wage employment.
The findings highlight the differences in opportunities for skill development and productivity growth between self-employment and regular wage-based employment.
Self-Employed Workers Have Fewer Learning Opportunities
According to the World Bank, one factor behind the slower earnings growth among self-employed workers is their limited exposure to more complex tasks and fewer opportunities to learn from colleagues.
Self-employed workers often operate independently, which can restrict their access to workplace-based learning, mentoring and knowledge-sharing opportunities that are more commonly available in formal employment.
Workers employed by organisations may have greater opportunities to work alongside experienced colleagues, take on increasingly complex responsibilities and acquire new skills through day-to-day interactions.
Experience Does Not Translate Into Earnings at the Same Pace
The difference in earnings growth becomes visible as workers accumulate experience.
While experience generally contributes to improved productivity and higher earnings, the extent of these gains can vary significantly depending on the nature of employment.
For self-employed workers, the absence of structured workplaces and limited interaction with peers can make it more difficult to acquire new skills and move into more productive activities.
In contrast, wage workers may benefit from formal training, workplace learning, exposure to new technologies and opportunities to take on more complex responsibilities as they gain experience.
Implications for India’s Employment Landscape
The findings are particularly relevant for economies where a substantial share of workers are engaged in self-employment and informal economic activities.
Self-employment can provide an important source of income and livelihood, particularly when formal employment opportunities are limited. However, ensuring that self-employed workers have access to training, technology, finance, markets and professional networks can be important for improving their productivity and long-term earnings.
Greater access to skill-development programmes and opportunities for peer learning could help self-employed workers overcome some of the limitations associated with working independently.
Need to Strengthen Opportunities for Skill Development
The World Bank’s findings point to the importance of improving the quality of employment rather than focusing only on the number of jobs created.
For self-employed workers, policies that facilitate access to training, business networks, digital tools, technology and better markets could help increase productivity and earnings over time.
The comparison between 3.8% earnings growth for self-employed workers and 6.5% for wage workers after five years of experience underscores the importance of creating mechanisms through which independent workers can also gain experience, acquire new skills and move towards more productive economic activities.
