Monthly Income of Self-employed Drops Sharply

About half of self-employed Koreans believe recent economic conditions are worse than the financial crisis in the late 1990s while 73 percent of them are concerned that economic conditions would aggravate further in the second half.

Also, three out of 10 self-employed people consider changing or closing down businesses as their monthly sales and income fell 17.8 and 30 percent, respectively, in the first half compared to last year. Concerns are mounting that recent economic difficulties would result in a drastic restructuring of self-employed businesses.

The Dong-A Ilbo and the Korea Chamber of Commerce and Industry jointly conducted last week a survey of 486 self-employed people in seven cities, including Seoul, Busan, Daegu, Incheon, Daejeon, Gwangju and Ulsan.

Those subject to the survey were smaller businesses with less than five permanent workers: small businesses in the food and beverage sector; small restaurants; accommodations; retailers selling household goods and furniture; general merchandise businesses such as supermarkets; specialized retailers including bookstores and flower gardens; and other services involving hair salons and public baths.

In the survey, 220 respondents (45.3 percent) answered that business conditions are worse than ever (than the 1997-98 financial crisis) and 218 respondents (44.9 percent) said business conditions are worse than usual.

With business conditions aggravating, monthly sales of small businesses fell 17.8 percent to an average 27.19 million won in the first half, down from 33.07 million won a year ago. During the same period, self-employed people`s monthly net income also plunged 30.2 percent to 2.55 million won on average, down from 3.64 million won.

A source from the Korea Chamber of Commerce and Industry said, “Since they could not fully reflect the increment in prices, despite the growing cost boosted by an increase in oil and raw material prices as well as consumer prices, their income seems to fall more sharply.”

Among the respondents, 131 people (27 percent) answered that they considered changing or closing businesses due to economic difficulties. Among them, 95 people (72.5 percent) responded they would decide when to change or close their businesses after watching future developments, while 18 respondents (13.7 percent) said they would change or close businesses soon.

The number of jobs has also decreased in small businesses.

The small businesses run by the 486 respondents had an average 2.56 regular workers earlier last year. After falling to 2.51 at the end of last year, the figure has now fallen further to 2.35.

The respondents of the survey generally had a negative forecast for business conditions. When asked to forecast business conditions in the second half, 262 respondents (53.9 percent) said business conditions would somewhat aggravate, while 91 respondents (18.7 percent) answered business conditions would rapidly deteriorate.

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