Go to contents

[Editorial] Small Business Woes

Posted July. 24, 2006 03:18,   


An increasing number of self-employed small businesses, such as restaurants and shops, are either temporarily suspending or closing down their businesses. A large number of small business owners say that the current situation is even worse than it was during the Asian financial crisis, and that they have almost given up their livelihood. Some, with enraged voices, say that they “want to accuse the administration of this situation.”

While the government cites the reason for the low profitability of the small businesses as excessive competition amongst the businesses (Currently there are 600,000 restaurants and 630,000 retail stores across the nation.), the primary cause is the increased number of self-employed due to lack of jobs in enterprises. It is obvious that less people would insist on self-employment if the government promotes the investment of enterprises and in turn creates a lot of decent jobs. It was irresponsible for the education minister Kim Byong-joon, the former chief policy secretary in Cheong Wa Dae, to say that “there are simply too many self-employed people.”

The Roh administration pledged “7.0 percent average annual growth and creation of 500,000 new jobs annually.” However, the economic growth didn’t even reach 4.0 percent on average. Due to low investment, not many jobs were created and the consumption remained weak, which put enormous pressure on working classes. In May 2004, when Roh overcame the impeachment, he guaranteed the public that “the economy won’t be a problem during his term of office” but nonetheless, the livelihood of the public worsened even further.

The Roh administration, pursuing equity and balanced growth, has focused on hitting the rich by dividing the society by the top two percent and the lower 98 percent” or “20 to 80,” but it turns out that it was pushing the working class, including the self-employed of small businesses, around. The “big government” announced that it would increase the number of public servants using the tax and launch its own business using national finance, but how was the performance of it so far? It almost killed the construction industry and related businesses by adopting real estate policies that levy punishment taxes on the public. The money flowing out of Korea in tourism, education, and medical service sectors skyrocketed as the administration fostered an atmosphere where people willing to consume couldn’t spend the money comfortably, and strengthened the regulation on high-quality service industries.

If the Roh administration, though belated, does not focus on revitalizing the economy and strengthening the growth potential, then the “working class” that the administration says it cares so much about would lose their foothold in the society entirely. Nevertheless, the Finance and Economy Minister Kwon O-kyu, who called for a “regulation improvement” in his inaugural speech, changed his words just two days later. He said that the restriction on the development of the Seoul Metropolitan area and the shareholding restriction limit of large enterprises, which are cited as the main culprits of weak investment, are “just a minor problem” and showed a lukewarm attitude towards easing the regulations. Perhaps it would be better for us not to expect anything to change in this administration with its chronic ideological code.