How Japan can address challenges for female freelancers and business owners

While the way people work is diversifying in line with the current trend that requires people to upgrade their work styles to keep up with the evolving future of work, the delay in developing the mechanisms and systems to support them is now posing a major barrier to women working as freelancers and business owners.

In Japan, most of the government support and guarantees for women facing life events such as childbirth and childcare in the middle of their career paths are only available for those who are employed by a company, leaving women with flexible work styles behind.

Japan is facing a variety of labour issues, including a declining workforce due to a falling birthrate, an ageing population, declining productivity, long working hours, and overwork deaths.

To remedy these issues, the government is promoting ‘work style reform’ with the aim of realizing a society in which workers can choose their own diverse and flexible work styles according to their individual circumstances.

According to a survey conducted in the autumn of 2021 by Lancers, operator of Japan's largest crowdsourcing service, the freelance population in Japan is 15.77 million, an increase of 6.4 million compared to the company's 2015 survey.

The size of the economy also increased by JPY9.2 trillion from 2015 to JPY23.8 trillion. In particular, the freelance market has expanded dramatically since 2020, when COVID-19 spread in Japan, which caused a dramatic change in the way people work.

Like freelancers, the number of female business owners is also on the rise. A survey by Tokyo Shoko Research shows that the number has increased 2.8-fold to 584,000 over the past 12 years.

Thus, as number of women working without being employed by a company continues to increase, three years have passed since 2019, when work style reform began, but the barriers that stand in the way of these women balancing work and childbirth/childcare remain high.

Female self-employed such as freelancers and business owners are not eligible for maternity leave and childcare leave, which are available to all female company employees in Japan, because they have no employment relationship and are not eligible to join the employment insurance scheme.

If a woman works for a company, she is allowed to take maternity leave for 12 weeks before and after childbirth and allowed to take childcare leave until her baby turns two years old at the maximum.

In addition, during the period of childcare leave, the government pays benefits equivalent to 50% to 67% of the pre-leave wage as income security. And all social insurance premiums are exempt from payment. Japan’s maternity and childcare support system is very generous and comprehensive.

However, given that none of these support systems are available to female freelancers and business owners, it is clear that there is a significant disparity in maternal protection and financial support simply because of differences in the way they work.

Without guarantees for leave, many female freelancers and business owners are forced to work soon after childbirth. A 2017 survey of women aged 20-50 who are self-employed and experienced childbirth found that 44.8% of them returned to work within one month postpartum and 59.0% within two months postpartum.

In order to return to work, they must secure childcare, but here again, female freelancers and business owners are at a disadvantage.

Even if they work the same number of hours as company employees, the advantage in the selection process for enrolment in the government-authorized nurseries is for company-employed women who use government's support system and return to work after childcare leave while maintaining their employment status.

This is because the current system for assigning licensed nursery schools is score-based, with points assigned according to the need for a nursery in each family. Selections are made in descending order of scores, with children from families with the highest scores selected first.

Except in the case of low-income families receiving welfare support, the point system favours families with two parents working as full-time regular employees.

This places female freelancers and business owners at a disadvantage especially when their workplace is at home, as they are deemed able to balance work and childcare or asked to submit proof of salary for the past several months even though they plan to return from leave due to childbirth and have not yet earned any income.

As a result, they often have to pay high daycare fees to leave their children in private daycare centres or hire a babysitter.

As a mother raising an 11-month-old boy while working as a freelancer, I was one of those mothers who struggled with this barrier when I returned to work a few months ago. I had to give up applying to licensed nursery schools early on because I had just resumed work and could not yet prove that I had an income, and just because I work from home.

After two months of nursery hunting, I was finally able to get my son enrolled in one of the private nursery schools that had a vacancy.

Behind a mother's decision to send her small baby aged under one-year-old away from her own hands to work, there is hesitation, heartache, and conflict due to the desire to value both her child and her work.

It will be necessary to develop a fair childcare system that can support mothers who still want to work and contribute to society through their work.

In its rush to expand childcare support, the Japanese government announced this month that it would consider establishing a new cash benefit programme for those who work shorter hours to raise their children after taking childcare leave. However, the reality is that such efforts are also limited to those working as company employees.

The World Economic Forum's latest Gender Gap Report shows that Japan ranks 121st out of 146 countries in terms of the economic participation and opportunity subindex – the lowest among the G7 countries.

One of the reasons why closing the gender gap of women's participation in the labour market in Japan continues to happen slower than in other developed countries may be that the environment is not sufficiently conducive for women to balance work and childbirth/childcare regardless of the work style chosen. This leads to an obstacle to both women's social advancement and tackling the declining birthrate.

The report reveals that countries that invest in all of their human capital and make it easier for their populations to balance work and family life tend to be more prosperous.

In order for Japan to address such pressing issues as declining birthrates and labour shortage, and to truly promote diversification of work styles, it is essential to develop social structures and systems that support women from various backgrounds – no matter what choices they make at any point in their lives.

This does not necessarily require only major innovations. Simply by expanding the scope of those who can use the already well-developed systems and frameworks in place, it should be possible to make changes toward building a more inclusive society.