mandatory self-employed workers' compensation insurance is being promoted with the goal of introducing a nationwide workers' compensation insurance system. we take a closer look at the government's policy roadmap, which will be phased in from occupations with a high risk of occupational accidents, to include the 3.3% of freelancers, and how it will support self-employed workers' insurance premiums.
mandatory self-employed workers' compensation insurance: How will it change the safety net for the 'solopreneur'?
last year, a laborer in his 60s was tragically killed in an accident at the site where he worked. despite working for the same company for 20 years, the company that caused the accident avoided workers' compensation liability on the grounds that the worker was a contracted "sole proprietor" rather than an employee.
this is the reality of the so-called "protection blind spot," where people are not legally protected if they are injured at work. this is a common risk faced by many "solopreneurs," who are self-employed or freelance workers who have moved away from employee status.
to address this social structure, the government is strongly pushing for mandatory self-employed workers' compensation insurance. Ultimately aiming to introduce a national workers' compensation insurance system as early as 2027, we will analyze the background of this policy, its specific roadmap, and its impact on the self-employed in depth.
1. the mystery of the 0.52% coverage rate: structural limitations of self-employed workers' compensation insurance
what is workers' compensation insurance and why is it mandatory?
workers' compensation insurance (hereafter referred to as workers' compensation) is a social insurance system that provides prompt and fair compensation, rehabilitation, and reintegration into society when a worker suffers an injury, illness, disability, or death while performing his or her job. the main feature of this system is that it follows "strict liability," which means that employers (business owners) are liable for compensation in the event of an accident, even if they are not intentionally or negligently at fault.
the problem is that this strong worker protection has historically been a "sticking point" for the majority of self-employed workers.
the barriers of voluntary enrollment and 100% out-of-pocket premiums
currently, employers are required to pay 100% of workers' compensation premiums for wage earners. however, for the self-employed, workers' compensation insurance is voluntary, and there has been a structural limitation that the self-employed must pay the full amount of premiums incurred.
as a result of this financial burden, as of July of last year, the rate of self-employed workers' compensation insurance among the self-employed remained extremely low at just 0.52%.
high disaster risk statistics for small businesses
the lack of workers' compensation insurance means a lack of a safety net, and the statistics are shocking, especially for small businesses, which are at greater risk. the workers' compensation rate for small businesses with fewer than 5 employees is 1.11%, nearly 1.7 times higher than the 0.66% rate for all industries.
this situation reinforces the paradox that small business owners, who are most exposed to the risk of disaster, are forced to turn away from public protection for economic reasons. Therefore, mandatory self-employed workers' compensation insuranceis more than just a policy change, it is an essential step for the state to ensure the right to survival of those at risk.
2. roadmap to a national workers' compensation system: a safety net for all working people by 2027
a phased expansion strategy: starting with high-risk occupations
the goal of the government's workers' compensation policyis clear. it is to select self-employed workers with a high risk of workplace accidents by occupation to be covered by workers' compensation insurance (compulsory), and to gradually expand the coverage to include allworking people as early as 2027.
the Ministry of Labor has been conducting a survey for the past year on the types of industries where accidents occur and the demand for workers' compensation insurance. Based on this survey, workers' compensation insurance coveragewill be expandedto occupations with a high risk of accidents.
expanding protection: Freelance workers' compensation and 3.3% business income tax payers included
one of the important features of this policy is that it breaks down the boundaries between traditional workers and self-employed people.
in addition to self-employed individuals, the National Workers' Compensation Insurance Systemaims to cover all "working people," including those who pay the 3.3% business income tax, who are often referred to as "freelancers in disguise" and have been unprotected due to their ambiguous worker status.
this is a step towards transforming worker protection in the modern era of the gig economy, where employment is increasingly diverse, and demonstrates the government's commitment to strengthening the social safety net by increasing freelance workers' compensation coverage.
Table 1: Current self-employed workers' compensation insurance vs. national workers' compensation insurance system (2027 target)
categorycurrent (voluntary enrollment)national Workers' Compensation Insurance System (2027 Target) enrollment method voluntary (individual choice) phased-in (mandatory) starting with high-risk occupations insurance premiums 100% out-of-pocket 100% out-of-pocket (with government premium assistance) key targets employers with no workers or less than 50 employees all working citizens (including self-employed, 3.3% freelancers, etc.) workers' compensation insurance coverage rate 0.52% (low) target to increase significantly
3. policy dilemmas and social consensus: protection vs. burden
whilemandatory self-employed workers' compensation insuranceis an inevitable national imperative, there is a major hurdle to overcome for the policy to succeed. that mountain is the very real resistance of the self-employed to paying the premiums.
currently, the idea of mandatory additional insurance premiums is a huge burden for the self-employed who earn a small income. this is why it has been pointed out that if the current structure of having to pay the entire premium is maintained, the policy's acceptability will decrease and it may face headwinds of resistance from small business owners.
in the end, the realization of a national workers' compensation insurance systemrequires more than just legal amendments; it requires fundamental social discussion and consensus on the premium sharing structure. to address this issue, the government is planning to form a labor-management expert council and proceed with a phased implementation through social consensus.
4. practical Support for the Self-Employed: Reducing Premiums for Sole Proprietors
in addition to the rationale for the policy, the government is also preparing concrete support measures to ease the financial burden on the self-employed. the insurance premium support plan is a key device to reduce resistance to the policy and induce inclusion in the system.
utilizing support for small business workers' compensation insurance premiums
some central government ministries and local governments have already implemented premium support programs for small business employment insurance premiums and self-employed workers ' compensation insurance premiums.
by utilizing this support program, self-employed peoplecan receive up to 50% of the premiums they have to pay **for workers' compensation insurance**. 11 For example, in the case of the Busan Small Business Support Program, we found a case of 50% support for workers' compensation insurance premiums for up to 5 years.
Table 2: Workers' compensation insurance premium support for small businesses (based on current cases)
support Categorysupported byworkers' compensation insurance premium support ratiopolicy significance support for small business workers' compensation insurance premiums self-employed small business owners who voluntarily enroll in workers' compensation insurance up to 50% of premiums paid immediately alleviate the financial burden of mandatory enrollment to increase system acceptance policy Direction protecting small businesses and inducing them to join the system government support measures are being prepared institutional foundation for the success of the future mandatory nationwide self-employed workers' compensation insurance policy
these support programs are a realistic solution to greatly alleviate the financial burden of mandatory enrollment. as the government moves toward mandatory nationwide coverage, it is likely that the current local and limited premium assistance will be expanded to a universal policy on a national level.
5. FAQ: Self-employed workers' compensation insurance, I'm curious about this
Q1. What are the benefits of self-employed workers' compensation insurance?
workers' compensation insurance follows a no-fault liability system that compensates injured workers quickly without asking if they are at fault. in the event of an on-the-job injury or illness, you can receive full medical treatment (medical benefits), as well as leave benefits for lost income (70% of your average wage), protecting you and your family's livelihood from unexpected disasters.
Q2. Which self-employed people are currently eligible for workers' compensation insurance?
currently, self-employed businesses that do not use workers or employ fewer than 50 workers can enroll on a voluntary basis. the government plans to expand the scope of voluntary enrollment in a phased manner, focusing on occupations with a high risk of accidents, through a study under the mandatory self-employed workers' compensation insurance policy.
Q3. Are freelancers and those who pay the 3.3% business income tax subject to mandatory enrollment?
yes, the goal of introducing a national workers' compensation insurance system is to cover all "working citizens," including those who work in special forms of labor and those who pay the 3.3% business income tax. this is to strengthen worker protection in areas where the employment relationship is ambiguous.
Q4. How are self-employed premiums determined?
self-employed individuals' insurance premiums are calculated by multiplying the amount they choose from the amount notified by the Minister of Employment, Labor, and Welfare (the base remuneration amount) by the workers' compensation insurance premium rate for each industry.currently, unlike employees, you pay 100% of the premium, but the government may expand support measures in the future.
Q5. Is there any concern that the introduction of national workers' compensation insurance will worsen the fiscal situation?
it has been pointed out that the financial deterioration of the Workers' Compensation Insurance Fund may be exacerbated if a large number of new members are covered. the government plans to make multifaceted efforts to secure the sustainability of the system, with the premise of social consensus through a labor-management expert council, in addition to preparing premium support measures.
conclusion: National workers' compensation insurance is a win-win, not a mandate
mandatory workers' compensation insurance for the self-employedis an issue that can no longer be postponed. 0.the current voluntary system has lost its ability to protect the vulnerable, as evidenced by the low 52% workers' compensation insurance coveragerate. With the goal of national workers' compensation insurance by 2027, the government is pushing to expand coverageto high-risk occupations and freelance workers, fulfilling the national promise to ensure a minimum livelihood for all working citizens exposed to risk.
of course, there remains the realistic dilemma of paying insurance premiums for self-employed individuals, but if the government's support plan is reasonably derived with reference to the Small Business Support Project, which provides up to 50% support, this policy will be a win-win step towards a society where all citizens can work with peace of mind.
what are you most curious about this policy change and what support do you think is needed? share your thoughts in the comments. and don't forget to subscribe and add your neighbors so you don't miss our next policy analysis!