“I believed in Moon Jae-in and former President Yoon Suk-yeol, who said they would save local small business owners and self-employed individuals. But what is the current situation? Is it solely our (small business owners') responsibility? We have reached our limit. What will be different in the next government?”
On the 19th, at a meeting in Jongno, Seoul, a 61-year-old store owner, Lee, sighed and said this. He has been running a Korean restaurant for about 30 years, but is currently considering closing it. He recently managed to pay off a loan of about 120 million won that he took out during the COVID-19 pandemic, but his restaurant continues to operate at a loss, putting him in a position where he has to borrow again.
Lee said, “Raising a child requires constant spending, and running a restaurant does not generate money; it just ends up with paying off debt,” and added, “I have no confidence in overcoming this difficult situation again.”
Due to the economic downturn and high interest rates following COVID-19, self-employed individuals are facing difficulties. Like Lee's concerns, the number of self-employed people who are unable to generate actual revenue and are closing their businesses is increasing.
A store owner who has been operating a clothing and accessory shop in a basement shopping center for over 20 years said, “The vacancy rate in the underground shopping center has reached 30%,” and added, “After paying rent and management fees, there's nothing left.”
According to Statistics Korea, the number of self-employed individuals has been decreasing each month this year. In April, the number of self-employed individuals nationwide was 5.615 million, down by 6,000 from 5.621 million in April of last year. In January, the number decreased by 28,000 compared to the previous year, followed by reductions of 14,000 in February and 2,000 in March.
◇Self-employed individuals facing closure say, “There are limits to enduring”
Self-employed individuals on the brink of closure all express, “There’s nothing we can do but endure the losses.” This is because if they stop what they have been doing, they practically have no other options. This background is also why they depend heavily on government support. However, they are not simply standing idly by.
“In fact, self-employed individuals are not business owners. They work alone. Moreover, to survive in a crisis like the current one, they need to reduce staff.” This was said by another restaurant owner, Kim, whom I met in Jongno.
Kim let go of one employee three months ago because her monthly sales had decreased by about 30% compared to last year. Currently, she serves at the store while her husband prepares the food. At the same time, she changed the structure so that customers bring their own water and side dishes. After finishing their meal, customers have to bring their plates to the dish return area in front of the kitchen. While there may be customer complaints about the ‘poor service,’ it was an unavoidable choice to reduce staff in order to make a profit.
The biggest expenses in running a restaurant are broadly three: ingredient costs, labor costs, and monthly management fees such as rent. Among these, the part that restaurant owners can adjust to make a profit is labor costs. However, as the work increases, work-life balance (balance between work and life) worsens.
In fact, the number of self-employed individuals referred to as ‘lone business owners’ who do not employ anyone is increasing. From February to April, the number of self-employed individuals without employees has increased for three consecutive months compared to the same month last year. As of April, lone business owners accounted for 4.215 million, or 75% of all self-employed individuals.
◇Presidential candidates’ support measures met with indifference…“We need to change the game and innovate”
With the presidential election approaching, self-employed individuals show indifference toward the support measures proposed by prominent presidential candidates. Lee Jae-myung of the Democratic Party of Korea and Kim Moon-soo of the People Power Party, among other leading candidates, have made promises centered on debt restructuring support for self-employed individuals and the issuance of gift certificates to boost consumption.
However, self-employed individuals raise their voices, saying that they need to see specific support measures to know if this is enough, arguing that low-interest loans and the expansion of policy funds are merely temporary financial aid and not fundamental solutions to the current crisis.
Song Chi-young, the head of the Korea Traditional Market Association, which represents the rights and interests of small business owners, stated, “The lives of self-employed individuals have reached a critical point and cannot be resolved with existing support measures,” adding that “extraordinary measures capable of changing the market dynamics, such as complete cancellation of loan interest, must be put in place.”
Innovations in the government's policies for small business owners and self-employed individuals are also being suggested. Professor Mo Jong-rin of Yonsei University, known as the ‘street economist,’ stated, “The government has been pursuing policies to stimulate consumption by injecting money to revitalize the livelihood economy; however, this alone is insufficient,” and added, “The next government should establish favorable conditions for small business owners and self-employed individuals, considering regional characteristics, and explore ways to enhance the competitiveness of individual product content, thereby initiating innovation in support for small businesses.”