9 out of 10 business income earners have a ‘fake 3.3’... Emergency disguised employment of elderly people

While the number of business income earners has increased rapidly by more than 2 million over the past 6 years, 9 out of 10 of the increased business income earners were found to be engaged in 'other self-employment', which is suspected of being a 'fake 3.3 contract'.

In particular, as the number of business earners over the age of 60 has more than doubled in six years, it is pointed out that the government's 'tweezers' labor inspection is necessary to provide practical relief for the rights of older workers who are forced into marginal jobs after retirement.

According to the 'Business Income Tax Payment Statistics for the Last 6 Years' received from the National Tax Service by the office of Democratic Party of Korea lawmaker Kim Joo-young, a member of the Climate, Energy, Environment and Labor Committee of the National Assembly on the 8th, the number of people subject to business income withholding increased by 2,002,478 (29.94%) from 6,688,444 in 2019 to 8,699,922 in 2024.

Among these, the proportion of business income earners registered under the code ‘other self-employment’ (940909) reached 90.1% (1,804,109 people).

Other self-employment is a code that registers part-time jobs, freelancers, etc. that are not included in clear industry codes.

However, it is believed that this code includes a large number of so-called 'fake 3.3 contract' workers, who in reality are subordinate to the employer and provide labor, but pay 3.3% business income tax instead of the four major insurances.

In other self-employed businesses, the number of business earners over the age of 60 also increased significantly.

By age, business income earners aged 60 or older reported under other self-employment codes more than doubled from 369,926 in 2019 to 776,049 in 2024.

Among the 669,000 increase in business income earners over the age of 60 over the past 6 years, the increase in other self-employment was 406,000, accounting for 60.7%.

The analysis is that the jobs that people of retirement age entered were marginal jobs employed in the form of fake 3.3, such as restaurants, distribution, security, and short-term labor.

A representative job is that of a caregiver.

Caregivers are largely divided into personal care, where an individual hires a caregiver through a care service company, and joint care, where a professional caregiver resides in the hospital room and takes care of patients.

The problem is that business income is withheld from caregivers hired in the form of shared care by reporting them under the personal care industry code (940912), thereby avoiding employer responsibility under the Labor Standards Act.

As of 2024, of the 56,518 caregivers who paid business income under the caregiver industry code, the number of caregivers for whom hospitals and clinics are obligated to withhold business income was 32,022 (56.6%), or more than half.

The number of caregivers for whom the nursing hospital withheld business income tax was 20,056, and their per-capita annual income was only 15.1 million won, which is less than the minimum wage.

The situation among young people is also serious.

In 2024, out of the total 2,018,000 business earners under the age of 30, other self-employed people will reach 1,443,000 (71.5%), so it is estimated that 7 out of 10 young freelancers are fake 3.3 workers. Their per capita annual income was only 6.31 million won.

Moreover, circumstances were also discovered where businesses were hiring ‘in small chunks’.

The number of businesses that paid business income to other self-employed income earners increased by 61.6% from 447,000 in 2019 to 723,000 in 2024, while the number of income earners per business decreased from 8.08 to 7.19.

This means that the rate at which businesses using business income earners is increasing is faster than the rate at which income earners per business place is increasing. There has been an increase in the number of businesses being divided into smaller businesses or small businesses using people as a form of business income.

Rep. Kim Joo-young said, “In order to provide practical relief for the rights of workers classified as business income earners, the Ministry of Employment and Labor needs to supervise labor according to detailed standards by industry and age.”

Ha Eun-seong, a labor attorney at the Saetbyul Labor Attorney Office who conducted the survey, emphasized, "As industrial accident insurance for caregivers is being discussed, there is an urgent need for preemptive supervision of hospitals that operate under a shared care system and avoid employers' responsibilities."