On the 5th, Small Business Day, a store in a traditional market in Seoul was closed and a rental notice was posted. Yonhap News
[서울경제]
Every year, November 5th is ‘Small Business Day’, designated to improve the social status of small business owners and improve relationships with local residents. Small Business Day has returned again this year, but the sighs of self-employed people are deepening by the day.
Mr. Kim, a self-employed person in his 40s who opened a private cafe in Seoul last January but suffered from continued sluggish sales and eventually decided to close the business at the end of last month, sighed in a phone call with the Seoul Economic Daily on the 5th, saying, “I just couldn’t hold on.”
Mr. Kim said, “Shortly after starting the business, a low-priced coffee brand store opened nearby, so all the customers we had stopped coming. We tried to differentiate ourselves by increasing the number of items sold, such as sandwiches, but due to rising inflation, the price of food ingredients soared, so we could no longer sell any more.” “I decided to close the business because I thought it would be difficult to hold on,” he said.
Small business owners unanimously said, “It is harder now than in 2022 when COVID-19 was prevalent.” Mr. Kang, in his 30s, who runs a bar in the metropolitan area, said, “The number of customers has not increased compared to two years ago, but prices are rising without stopping.” He added, “In a situation where there is insufficient support for small business owners, a series of bad news is causing self-employed people to collapse. “There are not just one or two people around,” he said.
In fact, the situation of self-employed people is becoming more difficult as time goes by. According to the ‘Small Business Trend Report’ released by Korea Credit Data on the 4th, sales per business in the third quarter of this year were 43.31 million won, a decrease of about 2.74% compared to the same period last year. Profit also fell 1.26% compared to the same period last year and 13.7% compared to the second quarter of last year, to 10.2 million won. In particular, it was found that the restaurant industry took a direct hit from rising prices. Compared to the first quarter of this year, the sales of fast food, Japanese food, and Jooljip in the third quarter decreased by 4.3%p, 5.8%p, and 6.3%p, respectively.
The number of self-employed people closing down their businesses due to declining sales was at an all-time high. Last year, the number of business closures reached 986,000, showing that the number is close to reaching 1 million. This is a more serious level than in 2021 (885,000 people) and 2022 (867,000 people) when COVID-19 was at its peak. By reason for business closure, ‘business slump’ was found to be the most common with 482,183 people.
On the other hand, the number of new startups fell to 1.276 million last year, following 1.457 million in 2021 and 1.351 million in 2022. The proportion of self-employed people among all employed also fell below 20% for the first time in history. According to the National Statistics Portal, out of the total employed of 28.842 million last September, 5.751 million, or 19.9%, were self-employed.
The government announced that it would expand the scale of support for small business owners by taking into account the circumstances of the self-employed. On the 4th, President Yoon Seok-yeol delivered a speech on the 2025 budget read by Prime Minister Han Deok-soo, saying, “We will extend the repayment period of policy funds by up to 5 years and provide annual delivery fees of 300,000 won to small and medium-sized business owners to ease their management burden.” “We will expand the New Start Fund, which is used to adjust the debt of small business owners, to more than 40 trillion won, and actively support re-challenges through specialized step-by-step employment programs that cover business closure, job preparation, and job search,” he said.
Reporter Chae Min-seok [email protected]
