You know, Herman, I was walking through Mahane Yehuda earlier, just watching the vendors and the small shop owners, and it hit me how much of the Israeli spirit is tied up in that independent, self-starting energy. But then I come home and hear Daniel talking about the absolute mountain of paperwork he has to climb every two months just to exist as a freelancer. It is such a strange paradox, right? We call ourselves the Start-up Nation, but if you are a start-up of one, the system feels like it is actively trying to discourage you. Especially now that the value added tax has ticked up to eighteen percent.
It really is a fascinating contradiction, Corn. And by the way, for anyone new joining us, I am Herman Poppleberry. We are here in our living room in Jerusalem, and as Corn mentioned, our housemate Daniel sent us a really poignant prompt today about the reality of being an Atzmai, which is the Hebrew term for self-employed. He is feeling that weight of being a legal freelancer here, where you are contributing to the collective pot, but when the wind blows too hard, you are the first one left out in the cold.
Exactly. Daniel was pointing out that even though he is paying into social security, which we call Bitua'h Leumi, and he is mandated to pay into a pension, there is no safety net for him. No unemployment benefits if he loses a major client, no real cushion during a national crisis. It is like he is paying for a premium membership but only getting the basic access. It got me thinking, is this just how it is everywhere? Or are we particularly behind the curve here in Israel?
That is the million-dollar question. Or maybe the million-shekel question. The short answer is that Israel is actually quite traditional, almost rigid, in how it defines the relationship between the state and the worker. Our system was built on the foundations of a very centralized, labor-union-heavy economy. The system is designed for the salaried employee, the Sachir. If you have a boss, you have a protector. If you are your own boss, the state treats you almost with a level of suspicion, or at least with a lot of indifference. And it has actually gotten more complex recently with the twenty twenty-five invoice reform, where you now need a specific allocation number from the tax authority for any invoice over twenty thousand shekels just to make sure it is legitimate.
It feels like the bureaucracy is the punishment for the audacity of wanting to work for yourself. But Daniel asked for examples of where this is being done better. Who is actually looking at the twenty twenty-six economy and saying, hey, the future is independent, let's make it sustainable?
There are some really compelling models out there that make our system look positively medieval. If we look toward Europe, specifically the Nordic countries, they have mastered a concept called flexicurity. Denmark is the poster child for this.
Flexicurity. That sounds like a marketing term for a yoga mat. What does it actually mean in practice for a freelancer?
It is a hybrid of flexibility and security. In Denmark, the labor market is very flexible. It is easy to hire and fire, which sounds scary, but the security part is that the state provides a massive safety net and active labor market policies. For the self-employed, they have something called A-kasse. These are private, state-subsidized unemployment insurance funds. As a freelancer in Denmark, you can choose to join an A-kasse, pay a monthly fee, and if your business fails or you lose your contracts, you get unemployment benefits that are nearly identical to what a salaried worker would receive. We are talking up to ninety percent of your previous earnings in some cases.
Wait, so it is an opt-in system? You choose to insure yourself against the loss of your own business?
Exactly. And the state facilitates it. They recognize that a freelancer's contribution to the economy is just as valuable as a corporate lawyer's. So, they provide the infrastructure for you to protect yourself. It removes that existential dread that Daniel was talking about. You aren't just one bad month away from total disaster.
That seems so much more logical. In Israel, we have the mandatory pension for the self-employed, which was supposed to be a step forward, but it feels more like a forced savings account that you can't touch, rather than a safety net for the present. What about France? I remember you mentioning their auto-entrepreneur system once.
France is a great example of a country that realized their old bureaucracy was killing innovation. They created the micro-entrepreneur status, which is designed to be incredibly simple. You only pay social taxes and income tax as a percentage of what you actually earn. If you earn zero, you pay zero. They did tighten the rules slightly in April of twenty twenty-five, capping the ability to combine unemployment benefits with new business income at sixty percent, but the core idea remains: the state wants you to succeed.
Now that is a revolutionary concept. Here, Daniel has to pay a minimum to Bitua'h Leumi even if he has a dry month, right? And with the minimum wage increase last year, those minimum contributions have actually gone up.
Precisely. In Israel, there is a floor. In France, for the micro-entrepreneur, if the business is quiet, the burden disappears. But here is the kicker, Corn. Since twenty nineteen, self-employed workers in France can actually qualify for unemployment benefits under certain conditions, like if their business goes into liquidation. It is called the Allocation des Travailleurs Indépendants. It isn't as generous as the standard unemployment, but it is a guaranteed floor. It says to the citizen, go ahead, take the risk, start the business, we won't let you starve if it doesn't work out.
It is about de-risking the act of being an entrepreneur. It seems like the Israeli system actually increases the risk. It is almost like a fine for not being a salaried employee. I am curious about the trend, though. We are in February of twenty twenty-six. We have seen more companies embrace remote work and hybrid models as standard. Has the policy caught up to the reality of the workforce?
It is catching up, but slowly, and it is happening in pockets. The overall trend is a shift toward what researchers call portable benefits. This is a huge topic in the United States right now. In mid-twenty twenty-five, we saw the introduction of the Unlocking Benefits for Independent Workers Act in the Senate. The idea is that your benefits—health insurance, pension, disability, even paid time off—shouldn't be tied to a specific employer. They should be tied to the individual worker.
So the benefits follow the person, not the job. That makes so much sense for a world where people change projects every six months.
Exactly. Think of it like a digital backpack. Every time you do a piece of work, whether it is a three-month contract or a five-thousand-word article, a small percentage of that payment goes into your personal benefits account. It doesn't matter if you have one employer or fifty. The safety net is built piece by piece, transaction by transaction.
But who manages that? Is it a government body, or are we looking at private platforms?
That is where the debate is currently raging. Some argue for a state-managed individual account, almost like a more flexible version of our pension funds here. Others want to see the gig platforms themselves, the Ubers and Upworks of the world, mandated to contribute to these portable accounts. In the United Kingdom, they have a system of National Insurance where the self-employed pay different classes of contributions. Class two and class four. It is still a bit clunky, but it gives them access to the state pension and the National Health Service. The push now is to bridge the gap so that the self-employed also get the equivalent of statutory sick pay.
Sick pay! That is another huge one Daniel mentioned. If he gets the flu and can't work for a week, he just doesn't get paid. There is no such thing as a sick day when you are an Atzmai.
It is a massive hole in the system. And it is not just about the individual's suffering; it is a public health issue and an economic stability issue. If a significant portion of your workforce can't afford to be sick, they work through it, they get burned out, or they spread illness. Some countries are looking at collective insurance schemes. In the Netherlands, they have a very vibrant culture of ZZP'ers, which stands for self-employed without employees. It is a huge part of their economy. They have had a lot of success with something called Bread Funds, or Broodfondsen.
Bread Funds? Tell me that involves actual sourdough.
Sadly, no, but the concept is just as nourishing. It is a small-scale, local collective. Maybe twenty to fifty entrepreneurs who know and trust each other. They each put a small amount of money into a collective account every month. If one member gets sick and can't work, the others provide them with an income for up to two years. It is peer-to-peer disability insurance. It is transparent, it has low overhead, and it relies on social trust rather than a massive, faceless bureaucracy. The Dutch government actually delayed their mandatory disability insurance for freelancers until twenty thirty, so these Bread Funds are the primary lifeline right now.
I love that. It feels very communal, almost like the original kibbutz idea but modernized for the digital age. It is funny that we are sitting here in Jerusalem, the land of the kibbutz, and yet our freelancers are so isolated. Why hasn't that taken off here?
I think it goes back to that dual economy problem. The people who make the laws are, for the most part, people who have spent their lives in the salaried sector or the public sector. They don't feel the sting of the VAT report or the anxiety of a contract ending. There is a lack of empathy in the policy-making. But the trend toward remote work is forcing the hand of many governments. Look at the rise of digital nomad visas. Countries like Portugal, Estonia, and even Greece are competing for these workers. And to win them over, they are having to simplify their tax codes and offer better protections.
So it is a competitive market for talent now. If Israel doesn't fix its bureaucratic burden, our best freelancers might just move their residency to Estonia or Portugal.
That is already happening, Corn. We are seeing a brain drain of independent talent. If you can do your job from a laptop in Rehavia, you can do it from a laptop in Lisbon. And if Lisbon offers you a lower tax burden, a simpler filing system, and a better safety net, why would you stay and struggle with the Israeli Tax Authority?
It feels like the government here still views self-employment as a side hustle or a temporary state before you find a real job. They haven't realized that for many, it is a career choice. It is the future of the economy.
Exactly. As AI and automation take over more routine tasks, the value of the independent, creative, and specialized worker goes up. But that worker is also more exposed. If the state doesn't provide the infrastructure to protect that value, the whole economy becomes more fragile.
Let's talk about the bureaucracy for a second. Daniel mentioned he has a bookkeeper and an accountant, and he is still overwhelmed. Why is the reporting so frequent here? Every two months for VAT? That seems designed to interrupt your flow.
It is a legacy of a high-inflation era. Back in the nineteen-eighties, the government wanted its money as quickly as possible because the value of the currency was dropping by the hour. We fixed the inflation, but we never fixed the reporting cycle. In many other countries, you report annually or quarterly. The bi-monthly reporting is a massive time-sink. It is essentially six weeks of work and two weeks of accounting, every two months. It is an enormous hidden tax on productivity.
It is a tax on time, which is the freelancer's most valuable resource. So, if we look at the global trend, we see portable benefits, simplified tax statuses like in France, and collective insurance like in the Netherlands. What is the common thread? Is it a move toward more government involvement or less?
It is actually a move toward smarter involvement. It is not about the government doing everything; it is about the government creating a framework where security is decoupled from the employer. It is a recognition that the social contract is changing. The old contract was: you give forty years to a company, and the company and the state will take care of you. The new contract has to be: you give your talent to the economy in whatever way you choose, and the state will ensure you have a baseline of dignity and security.
That is a powerful shift. But it requires a lot of trust. The government has to trust that people won't abuse the unemployment benefits for the self-employed, and the people have to trust that the government will actually be there when they need it.
And that trust is thin in many places, especially here. But look at the UK's Universal Credit. During the pandemic, they temporarily increased the support for the self-employed to match what they were giving to furloughed employees. It showed that it is possible. The pipes are there; the government just has to choose to turn the valve.
So, if you are Daniel, or anyone listening who is currently grinding away as an Atzmai in a system that doesn't quite support you, what are the practical takeaways? Beyond moving to Denmark, which I assume is not an option for everyone.
Right, we can't all just move to Copenhagen for the A-kasse. The first takeaway is diversification of risk. In the absence of a state safety net, you have to build your own. That means not just a rainy-day fund, but a stormy-season fund. Most experts now recommend that freelancers keep six to twelve months of basic expenses in a high-yield account.
Twelve months! That is a huge mountain to climb when you are starting out.
It is, but it is the only way to sleep at night when the state doesn't have your back. The second takeaway is looking into private disability and loss-of-income insurance. In Israel, these are called Ovdan Kosher Avoda. They can be expensive, and the fine print is often a nightmare, but for a self-employed person, your ability to work is your only asset. You have to insure it.
And what about the collective? Do you think we could see something like the Dutch Bread Funds starting up here?
I think there is a huge opportunity for that. If a group of Israeli freelancers—say, a bunch of developers or designers—got together and formed a mutual aid society, they could bypass a lot of the traditional insurance headaches. It requires a lot of legal legwork to set up properly under Israeli law, but it is a model that works because it scales down the problem of trust to a group of people who actually know each other.
It is like a micro-community safety net. I think that fits the Israeli culture much better than a massive, faceless government program anyway. We are good at the "chevra," the social group.
Absolutely. Another thing is lobbying. We are starting to see organizations like the Independent Workers Association in various countries becoming much more vocal. In the US, the Freelancers Union has over half a million members. They offer their own health insurance plans and advocate for legislation like the Freelance Isn't Free Act in New York, which helps freelancers get paid on time. We need a much stronger equivalent of that here in Israel.
We have some small groups, but they don't seem to have the political weight of the big unions yet. But as the number of self-employed grows, that has to change, right? It is just math.
It is purely a numbers game. As more people move into this way of working—partly by choice, partly because the corporate world is becoming less stable—the voting power of the independent worker will become impossible to ignore. We are moving toward a world where the "gig economy" isn't just for delivery drivers; it is for everyone from surgeons to software architects.
I wonder how the tech itself will play into this. We talk about the bureaucracy being a burden. Could we see a future where your accounting and your social security contributions are just handled automatically by the platforms you use?
We are already seeing the beginnings of that. There are fintech companies now that act as an "employer of record" for freelancers. You work for whoever you want, but you technically become an employee of this middleman company. They handle the taxes, the pension, and the social security, and they pay you a salary. You get the freedom of a freelancer with the administrative peace of mind of a salaried worker.
That sounds like a great middle ground. You pay a fee for the service, but you get your time back.
Exactly. It is a private-sector solution to a public-sector failure. But ultimately, for the economy to be healthy, the state needs to catch up. A system that punishes risk-taking is a system that eventually stagnates. If we want to remain the Start-up Nation, we have to make it sustainable for the people who are doing the starting.
It is funny, we started this talking about Daniel's frustration, but it really is a much bigger picture about how we value work in the twenty-first century. If the goal of technology and AI is to give us more freedom, then our legal and economic systems need to be redesigned to support that freedom.
Well said, Corn. The trend is clear: the world is moving away from the single-employer model. The countries that embrace this early—by creating portable benefits, simplifying bureaucracy, and providing genuine safety nets for the self-employed—are the ones that will attract the best talent.
I hope someone in the Knesset is listening to this. Or at least someone who can fix the VAT reporting cycle. That feels like a low-hanging fruit.
We can dream, right? But in the meantime, we have to navigate the system we have. And honestly, just talking about it, acknowledging that the system is the problem and not the individual, that can be a huge relief for people like Daniel.
Yeah, you are not failing because you find the paperwork hard. The paperwork is hard because it was designed for a different century.
Precisely. And hey, if you are listening and you have found a way to navigate this, or if you are in a country with a system we didn't mention, we would love to hear from you. We are always looking for more examples of how this is being solved.
Definitely. We live for those "aha" moments when we find a better way of doing things. And if you have been enjoying the show, maybe take a second to leave us a review on your podcast app or on Spotify. It really helps other people find these discussions, and we genuinely appreciate the support.
It really does make a difference. We are here every week, diving into these weird and wonderful prompts. Thanks to Daniel for sending this one in—it's a topic that hits close to home for so many of us here in Jerusalem.
Absolutely. You can find all our past episodes at myweirdprompts.com. We have a search bar there, so you can dig through the archives.
Four hundred forty-one episodes and counting. It is a bit of a mountain itself, isn't it?
A mountain worth climbing, I think. Alright, I think that covers it for today. My brain is buzzing with thoughts on Danish flexicurity now.
It is a good buzz to have. Until next time, everyone.
Thanks for listening to My Weird Prompts. We will catch you in the next one.
Take care, everyone. Stay curious.
And stay organized with those VAT reports!
(laughs) Easier said than done, brother. Easier said than done.
(laughs) Fair enough. See you next week.
