Measures for the Self-Employed Running Small Businesses

Founding Personal Service Businesses to Become Harder-

The most controversial part of the new measures is the startup restrictions for beauty, laundry, and bakery/confectionery businesses.

The Ministry of Health & Welfare has amended related laws to restrict those who have received cosmetology licenses from starting their own businesses until they have undergone approximately six months’ practical training and startup education at a professional training institution. The amendment will be effective from 2007.

Skin care experts can only start their own businesses if they have earned separate skin care licenses. There will be separate licenses for makeup specialists and nail artists as well.

Laundromats, bakeries, and even postpartum care centers will become subject to more stringent startup restrictions. If the Mother & Child Health Act is revised in the latter half of 2005, it will apply specific facilities and personnel standards for establishing postpartum care centers from 2006 onward. There have been no such restrictions in the past.

For the 295 postpartum care centers already in operation, there will be a grace period during which they must reinforce their facilities and personnel to meet the new standards.

Commercial Concentration Maps to Be Provided-

The Small & Medium Businesses Administration has decided to create online commercial concentration maps that provide analyses of 1,600 commercial zones by 2007 in order to prevent restaurant, lodging, and retail businesses from starting up indiscriminately without consideration for commercial distribution.

For instance, the new maps will enable a person who wishes to open a ginseng and chicken soup restaurant in the Seohyeon Station area of Bundang, Seongnam-si, to see that the ginseng and chicken soup restaurant concentration for that particular area has reached the saturation level at 125 (appropriate levels: 90~100) and to relocate his plans to another area.

Starting in the second half of 2005, if a self-employed person visits the Small Business Development Center and pays a 100,000 won fee, the government will provide the remaining 400,000 won for him/her to receive “customized consulting.” If the consultants deem the business in question to have sufficient potential for growth, the consultee becomes eligible for a bank loan of up to 50 million won with backing from various regional credit guarantee foundations.

Those folding an existing business to start up a franchise store recognized by Kookmin Bank are also eligible for credit loans of up to 50 million won.

The government plans to prepare a franchise act to foster credible franchise businesses and motivate the self-employed to open franchise stores.

Employment Insurance for the Self-Employed-

There will also be direct support measures for self-employed persons in dire straits.

The Ministry of Health & Welfare has decided to devise a plan that exempts self-employed persons whose livelihoods are at risk from paying health insurance fees or allows them to postpone payments for a certain period of time. Detailed criteria of eligibility and extent will be announced in early June.

The Ministry of Labor will amend the Employment Insurance Act within this year to allow self-employed persons to enroll in employment insurance. Enrolled persons become eligible for various support and training allowances toward re-employment efforts. In addition, the free re-employment service, which is currently available only to small and medium business workers, will be extended to self-employed persons running small businesses.

Chi-YoungShin TK Sohn higgledy@donga.com sohn@donga.com