SMBI: "Employment Insurance Reform Needed to Introduce Parental Leave for the Self-Employed"

There has been a proposal that improving the employment insurance system is necessary to introduce parental leave for self-employed workers in order to support work-life balance for this group.

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On April 29, the Small and Medium Business Research Institute stated this position in a report titled “Plans to Introduce Parental Leave for the Self-Employed.” The institute pointed out that while parental leave is implemented through employment insurance, the system is designed primarily for wage workers and does not adequately cover various forms of employment such as the self-employed. Jung Sujeong, senior research fellow at the institute, stated, “Parental leave is urgently needed for the self-employed as well, so it is necessary to design a tailored system to increase their employment insurance enrollment rate.”

In other countries, parental leave is provided to self-employed workers in the same way as wage workers, with funding usually coming from general taxation or social insurance. The institute argued that, given the need for compatibility with the existing domestic system, utilizing employment insurance would be the most appropriate approach in Korea. Providing parental leave for the self-employed through general taxation is seen as less sustainable and unlikely to gain broad public support due to fairness concerns. Currently, self-employed employment insurance operates on a voluntary enrollment basis, with a participation rate of only 0.9%. Among the parental support policies currently in place in Korea, self-employed workers are only eligible for a portion of maternity protection-related childbirth benefits.

Comparison of Employment Insurance for Wage Workers, Artists, and Self-Employed Workers. Small and Medium Business Research Institute

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The institute proposed making enrollment in employment insurance mandatory for self-employed workers, instead of voluntary, and applying insurance rates equivalent to those for wage workers based on accurate income data in order to utilize employment insurance for parental leave. According to a survey jointly conducted last May by the institute and the Korea Federation of Micro Enterprises, 69% of self-employed respondents supported mandatory employment insurance enrollment to strengthen the social safety net and welfare system. The institute believes that if the appeal of welfare benefits desired by the self-employed (such as parental leave and unemployment benefits) is increased and mandatory enrollment is implemented in stages, acceptance would be possible.

The report also suggested that parental leave eligibility should be granted regardless of the self-employed worker’s gender, and that benefits should also be provided in cases where the spouse gives birth. In addition, the institute recommended that the parental leave period for self-employed workers be designed to match the one-year duration granted to wage workers. While reducing working hours during the child-rearing period is considered an appropriate approach, the institute explained that flexible options-such as temporarily closing the business, delegating management, or outsourcing childcare to a third party-should be considered, taking into account industry-specific conditions and individual circumstances.

Senior research fellow Jung stated, “Introducing a parental leave system for self-employed workers should be considered as a response to the population crisis and to address gaps in the social safety net,” adding, “In order to enhance the effectiveness of the system, it is also important to invigorate employment insurance for the self-employed, expand enrollment, and establish an income-based premium system.”

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