Japan Considering Unemployment Insurance for Contingent Labor Workforce
Flexibility comes with a price in the Gig Economy. Freelancer's aren't considered employees and therefore not covered by the Fair Labor Standard Act's protections regarding minimum wage and overtime pay. Most of all, the employers of gig workers aren't required to offer benefits such as health insurance, paid vacation, pension plans or sick leave — at least for now.
The Freelancers Union reported independent workers are “emerging as a powerful economic and political force” and that freelancers contributed $1 trillion dollars to the economy last year. Perks like higher wages, flexible schedules and remote work elevated the number of workers embracing the Gig Economy. But temporary contract work also removes the safety net provided by full-time employment, which often represents a significant barrier for workers entering (and thriving in) the on-demand economy.
Since 2010, more than half of new jobs created in the European Union have been through temporary contracts. In Spain alone, the government reported 18 million temporary contracts were given out last year, compared with 1.7 million full-time jobs. This has many countries trying to quickly develop plans that protect the growing number of workers in unconventional work arrangements.
Japan is the first to announce plans to support the on-demand workforce. The Japanese government is working with major private insurers to create unemployment insurance for freelance workers, providing a financial safety net during periods of unemployment. In addition, they are developing a plan that will allow individual workers to purchase healthcare coverage at up to 50% off by joining a national freelancers' association. Singapore's National Employers Federation is also developing a set of guidelines for the Employment of Term Contract Employees, under which employers are encouraged to provide benefits.
Representing over 50 million U.S. freelance workers, The Freelancers Union has been working with insurance providers stateside to develop better pricing for purchasing healthcare coverage, disability and other benefits.
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