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More Self-Employed Going Out of Business

Posted August. 18, 2008 06:45,   


An owner of an inn in Daegu is considering closing his business as the number of customers has almost halved year-on-year.

He cut his room rate from 30,000 won to 20,000 won a night in the beginning of the year but to no avail.

“Fewer customers are going to restaurants and bars near my inn since the beginning of the year, which means no customers for the inn as well. I barely manage to break even, but if gas bills go up this winter, my business will be in the red,” he said.

The worsening domestic economy has forced many small business owners and the self-employed out of business.

The National Statistical Office said yesterday that the number of small business owners and the self-employed was 5.945 million in the first half of the year, 73,000 fewer than in the same period last year.

The number fell below six million for the first time since the first half of 2003, when a massive crisis involving credit card delinquency hit the domestic economy hard.

After peaking in the first half of 2005 at 6.116 million, the number of small business owners and the self-employed has been on a constant decline over the past three years, going from 6.105 million in 2006 to 6.017 million last year.

The study said rising inflation due to high oil prices and sluggish employment has frozen consumer confidence, hitting small business owners and the self-employed hard.

Restaurant owners have been the worst hit. According to the Korea Restaurant Association, 23,000 restaurants closed between January and May this year.

Those still open are barely getting by. The monthly household income of non wage-earners who are mostly small business owners was 2.78 million won in the first quarter, over one million won less than that of wage earners (3.91 million won).

Experts said the majority of people who lost their jobs in the aftermath of the Asian financial crisis started their own business such as restaurants, inns and retail trade, sharply raising the number of small business owners and the self-employed.

Most of them, however, are under increasing burden due to the deteriorating domestic economy. The percentage of the self-employed among the employed was around 26.5 percent in 2006, much higher than 7.3 percent in the United States and 9.9 percent in Japan.

Sohn Min-jung, a researcher at Samsung Economic Research Institute, said, “Over the short term, the self-employed cannot expect better business without improvement in the domestic economy. Even over the mid-to-long term, the number of the self-employed will continue to drop due to sophistication of the industrial structure and restructuring of the self-employed sector.”

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