this report provides an in-depth analysis of the South Korean government's plans to make workers' compensation insurance mandatory for self-employed workers and to introduce a national workers' compensation insurance system in 2027 from the perspective of labor policy and the social insurance system. the extreme statistic that only 0.52% of self-employed workers are covered by workers' compensation insurance (hereafter referred to as workers' compensation insurance)demonstrates that the current "voluntary" system is a de facto policy failure. in particular, the rate of accidents in workplaces with fewer than five employees is 1.7 times the national average the reality is that the most at-risk groups are the most unprotected, demonstrating the 'paradox of risk'.

in response, the government is pushing for a policy paradigm shift from 'optional' to 'mandatory'. this report provides a step-by-step roadmap for this transition (including screening for high-risk occupations), the 'fake 3.3% workers' and special categories of workers (hereafter referred to as "specials").and the legal blind spots represented by "fake 3.3% workers" and "special needs workers," as well as the key economic issue of "insurance premiumsand the key economic issue of premium affordability. in particular, the case of 'self-employed employment insurance' with a low enrollment rate of 0.8 percentwhich has a low take-up rate of 0.8 percent, and presents the prerequisites for the success of mandatory workers' compensation insurance (income-based premiums, effective support measures).

I. Introduction: Publicizing the 'Unprotected Boss' Problem

1.1. Diagnosing the Current Situation: The 0.52% Policy Failure

since its introduction in 1964since its introduction in 1964, workers' compensation insurance has expanded its coverage to include wage earners, but the self-employed have been left virtually unprotected. as of July 2024, only 0.52% of self-employed individuals were covered by workers' compensation insurance. this conclusively proves that the current voluntary enrollment system is completely ineffective for the self-employed, regardless of the existence of a scheme.

the key reasons for the low enrollment are clear. first, it's the fact that enrollment is optional, and second, it's the structural problem of having to pay the entire premium out of pocket.according to classical insurance market theory, high-risk groups with a higher risk of catastrophe should be more likely to buy insurance because they feel the need for it. however, the 0.52% figure shows that this market principle is not working: the immediate costs (premiums) are far outweighing the uncertain future risks (disasters).

1.2. The paradox of risk: the most at-risk are 'uninsured'

the urgency for policy intervention stems from the 'imbalance of risk'. the accident rate for microenterprises with fewer than five employees is 1.11%, which is 1.7 times the average for all industries (0.66%). this means that small businesses, where the line between employee and self-employed is blurred, are at greater risk of workplace injuries.

this 'paradox of risk', where the most at-risk groups are the least insured, is a clear limitation of the current voluntary system. it is more than just a matter of individual choice, but a structural failure of the social safety net. therefore, the government's 'mandatory' push should not be interpreted as an 'improvement' of the existing policy, but as a paradigm shift that officially recognizes the failure of the voluntary model and returns to the basic principle of social insurance based on compulsion.

1.3. The government's policy response: a paradigm shift from 'choice' to 'obligation'

the current government has set 'a country where all working people are healthy and safe' as a national priority, and is promoting the phased introduction of national workers' compensation insurance so that all working people can be protected from work-related accidents.

against this policy backdrop, the government is promoting the mandatory self-employed workers' compensation insurance in stages, with the goal of eventually introducing a national workers' compensation insurance system by 2027, covering all "working citizens," including self-employed workers and freelancers who pay a 3.3% business income tax.

II. Mandatory Workers' Compensation Insurance for the Self-Employed: Policy Design and Step-by-Step Roadmap

2.1. First step: Research to identify 'high-risk occupations'

rather than mandating all self-employed workers at once, the government chose a phased approach, starting with a study on how to apply workers' compensation insurance to self-employed workers with high occupational risk. the purpose of the study is to provide a scientific basis for a phased approach to mandatory coverage by selecting occupations with an objectively high risk of disaster.

the core function of the study is to scientifically prove 'who is most at risk' to support the government's logic of 'why should we mandate them first'. this is to fulfill the political goal of fulfilling the presidential campaign promise of 'national workers' compensation insurance'to fulfill the political goal of implementing 'national workers' compensation insurance', and to provide policy legitimacy to combat future 'premium burden' resistanceto fulfill the political goal of fulfilling the presidential campaign promise of 'national workers' compensation insurance'. the catering industry, private interior designers, and delivery businesses, which are at high risk of industrial accidents, are likely to be the first to be subject to the mandatory insurance.

2.2. Court Preemption: Judicially Recognized 'Working Person' Injuries

while the legislative and executive branches are crafting policy, the judicial branch (courts) is already pushing the boundaries of workers' compensation and pressuring the executive branch for inaction.

case Study 1: The Workerhood of an Interior Contractormr. A, who was registered as a sole proprietor (trucking), died in 2022 after being crushed while carrying a piano at an elementary school's music room interior construction site. the Labor Welfare Service refused to pay survivor benefits on the grounds that Mr. A was a "sole proprietor" and not a "worker." However, the court overturned the decision. the court ruled that Mr. A was "a worker under the Workers' Compensation Insurance Act" because he worked under the substantial management and supervision of the company (which determined the content and timing of his work, paid his expenses, and provided him with meals). the substance of the work - a "dependent relationship" - prevailed over the legal appearance of self-employment.

case Study 2: Structural Risks of Delivery Riders delivery riders are "racing for their lives" under extreme time pressure.when they break traffic laws, such as running a red light, and are involved in an accident, it has been difficult to obtain workers' compensation approval in the past. However, courts are now recognizing this as an occupational injury because it is not an "intentional act," but rather an "occupational error" caused by the "structural problem" of time pressure.

these forward-looking judicial decisions show that the current definition of "worker" in the Workers' Compensation Act has not kept up with the diversity of employment in Korea. repeated cases of the Labor Welfare Service (the executive branch) denying workers' compensation and the judiciary overturning it have resulted in huge litigation costs and wasted administrative resources. therefore, the government's promotion of "National Workers' Compensation Insurance" is an attempt to fundamentally resolve this social conflict by legislatively and administratively "accepting" and "institutionalizing" the judiciary's progressive rulings.

2.3. End Goal: 3.3% Workers' Compensation for All, Including Freelancers

the government's long-term goal is to include not just self-employed people with business licenses, but also "ostensible freelancers" who pay the 3.3% business income tax. these are also known as "fake 3.3 workerswho are legally identified as freelancers or self-employed but are actually employed by a company and work just like wage earners, falling through the cracks of labor law. the government plans to lay the groundwork for a national workers' compensation insurance system that covers all of them by 2027.

III. Analyzing Legal and Institutional Blind Spots: Special Employment Workers and Freelancers

3.1. Boundaries of 'fake 3.3 workers': Who is an employee and who is self-employed?

the biggest blind spot is the "fake 3.3 workers" group. iT developerschinese medicine practitionersinsurance agentsinsurance agentsthey are spread across a wide range of professions and are not covered by the four major insurance programs (national pension, health, employment, and workers' compensation) due to the 3.3% business income tax withholding.

mandatory workers' compensation insurance for them is a different matter than for the "self-employed". they often have a de facto 'employer', which requires a discussion on who should pay the premiums (the company, similar to the employee), which entails an economic burden on the part of the company (the business owner), and therefore a larger social discussionon the part of the business (employer), and therefore requires a larger societal discussion.

3.2. Legacy of failed policies: the dilemma of the special 'exemptions' system

the government already operates a system that provides workers' compensation insurance for 14 special occupations, such as delivery drivers and golf course caddies. however, the biggest loophole in this system is the 'request for exclusion' system.it allows specialty workers to opt out of workers' compensation if they don't want to.

the problem is that this system is being abused by employers as a 'waiver of workers' compensation.there have been frequent cases of employers effectively forcing workers to apply for exclusion in order to avoid paying premiums.to address this issue, the government has strictly limited the reasons for exclusion from July 1, 2021, to "illness, injury, pregnancy, childbirth, childcare, and leave of absence for one month or more. nevertheless , there is still pressure from the field.

3.3. Vagueness of the special 'exclusivity' criteria

another limitation of the current special workers' compensation system is the 'exclusivity' criterion. the law requires that a worker must be "primarily engaged in labor for one business on a full-time basis for compensation. this has been a key reason for the exclusion of platform workers, such as delivery riders, drivers, and N-jobbers, who receive calls from multiple companies.

the government is pushing to abolish this "exclusivity" standardbut even if it is abolished, only about half of the estimated 2.2 million specialty workers, or 1.05 million, will be eligible. this clearly shows the limitations of the way the law 'enumerates' occupations that are eligible for workers' compensation insurance.

in the end, policy efforts over the past two decades to create a separate category of "special needs" and selectively protect themhas led to the abuse of 'exclusionary applications'and the limitations of the 'exclusivity criterion'and the limitations of the exclusivity standard. selective protection has proven to be costly and leaves gaps in the system. Therefore, the government's change of goal to 'national workers' compensation insurance'can be seen as a policy shift to eliminate the complicated middle ground of 'special cases' and simplify the system to a single standard of 'everyone who works'.

IV. Key Issues: Premium Burden and Financial Support Options

4.1. Resistance from the self-employed: "I don't make enough money anyway"

the biggest obstacle to policy implementation is the premium burden. a key reason why the current voluntary enrollment rate is only 0.52% is that the self-employed have to pay the entire premium.small businesses such as convenience stores, beauty salons, and delivery agencies are complaining that "sales are tight, and the government is trying to pass on the insurance premium."

conscious of this backlash, the government plans to conduct a demand survey and review burden reduction measures before institutionalizationthe government has repeatedly stated that it will proceed with the premise of social consensus through 'labor-management social dialogue' and the formation of an 'expert council'.

4.2. Government's carrot: Consideration of premium support measures

to reduce the burden of the mandate, the government plans to prepare a premium support plan by "referring to various social insurance premium support cases.similar support systems currently in operation are as follows

  1. durunuri Social Insurance: This program covers up to 80% of the Employment Insurance and National Pension premiums for "workers" in businesses with fewer than 10 employees . however, this program does not cover workers' compensation insuranceand the program is limited to "workers" only, not "sole proprietors".

  2. support from the Small Business Market Promotion Corporation: There is a program that supports employment insurance premiums (50-80%) and workers' compensation insurance premiums for one-person small businesses (SMEs).

  3. local government support: Jeonbuk Special Self-Governing Province and Gwangju Metropolitan Citysome local governments, such as Jeonbuk Special Self-Governing Province and Gwangju Metropolitan City, provide additional support for employment insurance and worker's compensation insurance premiums for self-employed individuals in addition to the central government support (Small Business Market Promotion Corporation project).

durunuri, the largest social insurance support program in Korea, excludes workers' compensation insurancethe largest current social insurance support program, excludes worker's compensation insurance, which reflects the traditional view that worker's compensation insurance is only the domain of "workers" (100% paid by employers). for the self-employed, workers' compensation insurance is not a 'cost' but a 'protection', but the Durunuri system does not take them into account as a policy.

therefore, in order to mandate 'national workers' compensation insurance,' the fragmented support projects of the Small Business Market Promotion Corporationwould have to be expanded and reorganized to the level of Durunuri, or a completely new large-scale support program would have to be designed.

table 1: Comparison of current social insurance premium support systems for self-employed and small businesses

support Program lead Agency supported by types of insurance supported workers' Compensation Insurance durunuri Social Insurance ministry of Employment and Labor / Labor Welfare Corporation workers at workplaces with fewer than 10 employees employment insurance, national pension

not supported

support for small business employment/worker's compensation insurance premiums ministry of SMEs and Startups / Small Business Market Promotion Corporation one-person small business (self-employed) employment insurance, worker's compensation insurance

supported

local government Support for self-employed individuals each local government (e.g. Jeonbuk, Gwangju) one-person self-employed within the jurisdiction employment insurance, worker's compensation insurance

support

V. Comparative Analysis: Lessons from the Self-Employed Employment Insurance System

5.1. Another Failure of Voluntary Enrollment: Employment Insurance for the Self-Employed

since 2011, the government has been operating the "Self-Employed Employment Insurance" system, which self-employed individuals (employers with fewer than 50 workers) can "opt-in" to.if you go out of business, you will receive unemployment benefitsfor 120 to 210 days, depending on the period of enrollment, as well asand vocational skills development trainingand other benefits.

however, despite these benefits, as of the end of 2024, only 0.8% of self-employed workers were enrolled in the program.

5.2. Analyzing the reasons for failure: the parallel theory with workers' compensation insurance

the reasons for the low take-up of self-employed employment insurance are exactly the same as the reasons for the failure of workers' compensation insurance.

  1. voluntary enrollment: enrollment is optional, not mandatory.

  2. cost-bearing: The premium (2.25% of the selected base compensation) must be paid out of pocket.

  3. high barriers to benefits: You must be enrolled for "at least one year" to receive unemployment benefits and "involuntary closure" (6 consecutive months of losses, ill health, etc), which can be difficult to qualify for.

workers' compensation insurance (0.52) and employment insurance (0.8) cross-validate the clear failure of the "voluntary social insurance for the self-employed" model. this demonstrates the economic behavior of the self-employed population, which weighs short-term costs (insurance premiums) much more heavily than future uncertain benefits (unemployment, accidents).

hence, workers' compensation insurance, which belongs to the realm of "social protection" and not to the realm of individual choice, i.e., "work-related disasterswhich belongs to the realm of 'social protection' and not to the realm of individual choice, is policy negligence. the government's policy choice to keep employment insurance voluntary but make worker's compensation insurance mandatorythe policy choice to keep employment insurance voluntary but make workers' compensation insurance mandatoryis a strategic decision to enforce the 'minimum social safety net' (workers' compensation) first, using the failure of employment insurance as a counter-example.

table 2: Key comparison of self-employed workers' compensation vs. employment insurance (based on current voluntary enrollment)

comparison self-employed workers' compensation (current) self-employed employment insurance (current) policy Purpose compensation in case of work-related disaster (injury, illness) support for livelihood (unemployment benefits) in case of involuntary closure of business enrollment Method voluntary (optional)

voluntary enrollment ( optional )

who can enroll

small and medium-sized business owners

self-employed with fewer than 50 employees

premium Rate (Example)

approximately 0.96% of base compensation ( varies by industry)

2. 25% of base compensation

core benefits

medical benefits (treatment costs), leave of absence, disability benefits

unemployment benefits (120 to 210 days), vocational training

enrollment rate (results)

approx. 0. 52

about 0. 8

VI. Conclusion: Policy Recommendations and Outlook

6.1. Policy Summary and Significance

mandatory Self-Employed Workers' Compensation Insurance and Roadmap for National Workers' Compensation Insurance by 2027the 1964 law centered on 'wage earners'from a 'wage earner ' centered system to a 'working citizen' system. this is a clear departure from the voluntary system, symbolized by the current coverage rate of 0.52and the clear failure of the voluntary system, symbolized by the current enrollment rate of 0.52%, and the very real risk of high accident rates in workplaces with fewer than five employeesand the very real risk of high accident rates in workplaces with fewer than five employees.

6.2. 3 Policy Recommendations for the Success of 'National Workers' Compensation Insurance'

in order for this policy shift to be successful, the following issues need to be addressed first.

  1. design a fair premium charging system (income-based charging) The current 'standard remuneration selection method' for self-employed employment/workers' compensation insuranceis effectively a flat rate, which is unaffordable for low-income earners and unreasonable for high-income earners. to be successful, a mandate should reflect a range of income types, including 3.3% freelancersto be successful, the mandate must be overhauled to a "real income" premium system, similar to health insurance premiums, to reflect the diversity of incomes, including 3.3% freelancers. this would be administratively challenging, including verifying incomeand other administrative challenges, but it is the only way to ensure the policy is fair and acceptable.

  2. consolidate and expand effective support programs Currently, the Small Business Market Promotion Corporationand local governmentsand local governments, should be consolidated into a stable financial support system such as the Durunuri Social Insurance model , should be integrated and expanded into a stable financial support system. the success of the policy depends not on the declaration of 'mandatory' but on the actual scale of financial injections in the form of 'premium support'. the financial responsibility of the government should be clarified to correspond to the mandate.

  3. a complete review of the ' special needs' system With the introduction of national workers' compensation insurance, the separate category of 'special needs'will become unnecessary. 'Application for exclusion'and 'exclusivity criteria'it is urgent to abolish complex and unsuccessful regulations such as 'application for exclusion' and 'exclusivity criteria' and to simplify the scope of workers' compensation insurance to 'all labor providers with income'.

6.3. Final Outlook

mandatory self-employed workers' compensation insurance is an irresistible policy direction. proactive judicial decisionshave already supported its legitimacy. the key is social consensus, not speed. government-funded researchtransparent disclosure of results-based information, genuine dialog with self-employed organizationsand, most importantly, financial support that will actually ease the burden on small businessesfinancial support measuresthat will actually ease the burden on micro-entrepreneurs will determine the success of the 2027 Roadmap.