A survey by the Cabinet Secretariat suggests there are 4.62 million freelancers nationwide, but the figure is believed to be much higher. Japanese staffing agency Lancers reports the number of freelancers on its books - including people with second jobs and side businesses - increased by 57 percent in 2020.

It's an increasingly appealing option for many people who have lost their jobs or had their shifts cut due to the pandemic. Others are taking heed of the government's call to pick up second jobs to counter the shrinking labor force, while senior citizens are also expected to work longer to fill shortfalls caused by the rapidly aging population.

Many companies still ban employees from moonlighting out of hours, but others are accommodating more flexible working styles. Employment law is yet to catch up with changing work culture. About 60 percent of problems reported by freelancers stem from the lack of a written contract that sets out labor conditions, job descriptions, deadlines, and expectations.

New legislation in the works

Government officials have set up a telephone hotline for freelancers. They've also published guidelines warning companies and clients that they can be punished under antitrust laws if they change the terms of engagement, delay payments, or pay less than what was initially agreed.

As it stands, there is no legal requirement for firms with capital funds of less than 10 million yen to follow those guidelines. Legislation is in the works to change that and protect freelancers with enforceable contracts. Lawmakers aim to draw up and approve a new set of policies in the next regular Diet session.

Meanwhile, the Labor Ministry announced a breakthrough for freelancers known as gig workers – including Uber Eats delivery staff and IT engineers. They are now are eligible for workers' insurance, but there are also calls to expand coverage to include accident compensation.