Discussion on 2023 Goal 'Employment Insurance for Self-Employed' Begins... Securing Acceptance May Not Be Easy

The target is 3.91 million, but only 36,000 insured persons by July
System improvement needed to raise enrollment rate from 'voluntary → mandatory enrollment'

Insurance premium rate of '2.2%' higher than general workers' '1.6%' is also an issue
Adjustment may cause fairness controversy among general workers, special workers, and artists

If the low-income social insurance support Durunuri model is discussed,
tripartite discussions on support brackets needed... Numerous challenges remain

On the afternoon of the 16th of last month, a memorial altar was set up in front of Exit 3 of Yeouido National Assembly Station to mourn self-employed individuals who passed away due to financial hardship and to urge the government to lift business restriction measures. (Image source=Yonhap News)

[Sejong=Asia Economy Reporter Moon Chaeseok] Social discussions to implement the employment insurance system for self-employed workers starting January 2023 have officially begun. Challenges such as expanding acceptance and establishing an income verification system remain, with the biggest hurdle being the expansion of acceptance.

To encourage self-employed workers to enroll in employment insurance, issues such as the higher premium rates compared to regular employees, special employment types (SETs), and artists, as well as resistance to mandatory income reporting in certain industries, need to be resolved.

As of July, the number of insured persons is less than 1% of the provisional target of 3.91 million

Source: Office of Song Ok-ju, Democratic Party of Korea

According to data received by Rep. Song Okju of the Environment and Labor Committee from the Ministry of Employment and Labor on the 3rd, as of July, the number of self-employed workers insured under employment insurance was 36,378. The number of enrolled workplaces was 1,331, with retail businesses accounting for 373 and accommodation and food service businesses 356, representing significant proportions.

The number of insured persons is less than 1% of the provisional target of 3.91 million set by the government at the end of last year through the nationwide employment insurance roadmap. At that time, the government announced that employment insurance would be applied to "one-person self-employed workers (2.31 to 2.58 million) and self-employed workers with employees (1.33 million)" among the economically active population.

Premium rate is 2.2%... Difficulties expected in improving the mandatory enrollment system

[Image source=Yonhap News]

To increase enrollment rates, a legal framework must be established to change self-employed workers from voluntary enrollees to mandatory enrollees, and if necessary, adjust employment insurance premium rates. However, significant resistance is expected during the discussion process. This is because the employment insurance rate for self-employed workers is 2.2%, much higher than 1.6% for regular employees and 1.4% for special employment types and artists. Due to the nature of self-employed workers who are both employees and employers, it is explained that the system where employees and employers each pay half of the premium cannot be applied as it is for other workers.

A representative from the Economic, Social and Labor Council, a social dialogue body under the President, said, "Due to the nature of self-employed workers, it will be difficult to change to a system where employers and employees each pay premiums." The government also stated, "Since it is difficult to judge self-employed workers the same as employees in terms of premium burden and unemployment benefit eligibility, various factors need to be considered, so the application method will be decided through social discussions."

Issues to be established by March next year... Employment Insurance Committee of the Ministry of Employment and Labor must also be convened if premium rate adjustment is discussed

The launch ceremony and the first plenary meeting of the Working Hours Exemption Deliberation Committee held on July 6 in the conference room of the Tripartite Commission in Jongno-gu, Seoul. (Image source=Yonhap News)

Discussions are sluggish. It is expected to take at least 4 to 5 months just to identify issues. On the 30th of last month, the Economic, Social and Labor Council launched the "Research Group on Expanding Employment Insurance for Self-Employed Workers." The plan is to establish "issues" by March next year. After that, the agenda must pass through the Agenda Development and Coordination Committee, the Operating Committee (equivalent to a standing committee of the National Assembly), and the Plenary Committee (the highest decision-making body) within the council. If a conclusion is reached that premium rate adjustment is necessary, the Employment Insurance Committee of the Ministry of Employment and Labor must also be convened separately. All of this must be done within next year to implement the system in 2023.

The council explained that since the research group has not even started full meetings yet, it is difficult to predict what issues labor, management, and self-employed representatives who are members of the group will raise. Expected issues include whether and to what extent to adjust employment insurance premium rates to secure acceptance, setting the scope of employment insurance coverage, and the necessity and support models for a separate financial support system for low-income self-employed workers.

The most sensitive issue, "premium rate adjustment," is expected to be difficult to handle due to fairness controversies with regular employees, special employment types, and artists. The government has announced that to prevent depletion of the employment insurance fund, premium rates will be raised by 0.2 percentage points from July next year (regular employees from 1.6% to 1.8%, special employment types and artists from 1.4% to 1.6%). While other workers’ rates are all increasing, lowering the rate only for self-employed workers could face significant backlash.

"Income verification for self-employed workers is underway by KIPF research... Special employment types and platform workers first"

On August 29, a memorial space for delivery riders was set up on the platform in front of Seolleung Station in Gangnam-gu, Seoul. On the 26th of the same month, a rider was fatally struck by a cargo truck on a road near Seolleung Station. Photo by Jinhyung Kang aymsdream@

The government's decision in the roadmap to apply the employment insurance system only to "one-person self-employed workers and self-employed workers with employees" may also change during the discussion process. Since the number of self-employed workers without employees, so-called "solo bosses," reached 4.249 million as of August and is increasing, there may be calls to expand the scope of beneficiaries, which could lead to discussions on adjusting premium rates.

There may also be calls to apply a system similar to the "Durunuri Project," a social insurance premium support policy for small workplaces and low-wage workers, to some low-income self-employed workers. In such cases, reasonable support criteria for low-income individuals and precise segmentation settings acceptable to the public would be prerequisites.

Regardless of social consensus, the government is in a position to accelerate the construction of an income verification infrastructure for self-employed workers. The government says it can smoothly establish the system by the end of next year. The Ministry of Strategy and Finance, the National Tax Service, and the Ministry of Employment and Labor are jointly preparing the income verification system, and for self-employed workers, they are currently awaiting research results from the Korea Institute of Public Finance (KIPF). The plan is to establish the income verification system for self-employed workers after first setting up the income system for quick service workers (including delivery drivers) and substitute drivers.

The income verification system for quick service and substitute drivers, who are subject to the system starting January next year, is expected to be completed by next month. Lee Eokwon, First Vice Minister of Strategy and Finance, said at a policy review meeting on the 24th of last month, "Starting next month, we plan to monitor the monthly income of some platform workers such as quick service and substitute drivers."

This content was produced with the assistance of AI translation services.