Basically, there are two principal types: the piece-rate worker who works for an employer or intermediary and the own-account worker who does her or his own marketing.
The piece-rate worker. She gets her raw materials from a trader, contractor, employer, or firm, makes them into finished goods at home, and delivers them to the same person. Rarely does she have any direct contact with the marketplace for the goods she makes? However, often the raw materials she receives are not sufficient, or certain necessary components are not provided, so she has to buy these items herself. While some employers or contractors loan equipment to their piece-rate workers, most have to provide their own tools. As such, the cost of equipment, maintenance, and infrastructure, such as electricity, can cut deeply into the workers’ earnings.
Some workers are engaged by international chains of production (garments, footwear, electronics, plastic footballs) while others work for national or local markets (garments, bidi, agarbatti, textiles). Certain forms of craft-work, while apparently traditional, are now done on a subcontracted basis (weaving, basket work). This trend is also growing in non-manufacturing areas such as Agri processing (cashew nut, cotton, horticulture, floriculture and animal husbandry).
The own-account worker. She is generally in direct contact with the market, buying her own raw material and selling her own finished goods. However, in terms of earnings and working conditions, she is not much better off than her piece-rated sisters. Own-account workers face competition from larger, more powerful businesses and rarely have access to credit, except at exorbitant rates of interest. Thus, they have to buy raw materials in small quantities, making them more expensive and are rarely able to sell their goods themselves directly in the markets. As a result, they too are dependent on agents, contractors, and other middlemen.
Although there is a theoretical difference between a piece-rate worker, who is dependent on a specific employer/contractor, and an own account worker who is supposedly independent, in practice this distinction is blurred. For example, weavers in Thailand are own-account workers in that they buy their own yarn and sell their cloth in the market. To do this, however, they generally have to buy their material on credit from the same merchants to whom they eventually sell their finished goods, and at prices determined by those merchants. So, although technically the producer is an own-account worker, she has no direct access to the best markets and has limited bargaining power. In terms of earning and working conditions, she is not much better off than the piece-rate worker.