Revenues of independent businesses fall in 2020

Store owners in a shopping district in east Seoul’s Gwangjin district on December 27 turn off lights for an hour to protest government policies related to Covid-19, including regulations and the social distancing support. [YONHAP]

Self-employed workers in Korea have suffered a dramatic drop in their income in the pandemic’s first year, a recent study has shown.

In 2020, their “operating profit” fell by more than 40%.

According to the joint study by Statistics Korea and the Ministry of SMEs and Startups published on Tuesday, in 2020 the country had 2.9 million independent businesses, up 4.7%. In 2019, the number of self-employed increased by 1.1%.

The increase in 2020 was partly attributed to people struggling to find jobs and seeking income through small business ventures.

Self-employed workers in the hotel and catering industry increased 7.5% to 49,000. In manufacturing, the total increased 2.7% to 24,000.

On average, the incomes of the self-employed fell 43%, with independent businesses reporting an average of 19 million won ($ 16,100) in surplus per year, compared to 33 million won in 2019.

This works out to about 1.5 million won per month.

The minimum living expense for a two-person household in 2020 was 1.8 million won.

The most affected businesses were in the arts, sports and entertainment industries, where operating profit fell 85.2% from an average of 20 million won in 2019 to 3 million won.

In education services, which includes hagwon, revenue fell 66 percent, from 22 million won to 8 million won.

The study found that 60 percent of independent small business owners were in debt. This is an increase of 8.1 percentage points from 2019.

The total debt of the self-employed in 2020 stood at 294.4 trillion won, up 19.3 percent. Each owed an average of 169 million won.

Of all independent businesses, 32.2% were owned by people in their 50s.

In 2020, 182,000 people in their 20s owned independent businesses, up 163.6%.

While 64 percent of self-employed business owners said they started their business because they wanted to be their own boss, 6.8 percent said they did so because they were having trouble finding a job.

This represents an increase of 1 percentage point from 5.8% in 2019.

The number of independent arts, sports and entertainment businesses fell 20.5%, while the number of independent retail businesses fell 16.7%.

Almost 68 percent of the self-employed supported government grants, 33 percent government loans, and 21.4 percent wanted lower costs for social insurance programs – the national pension, the employment insurance system , Korea Workers’ Compensation Insurance and National Health Insurance.

BY LEE HO-JEONG [[email protected]]

About Mark A. Tomlin

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