The ratio of self-employed among the employed has dropped to around 10% for the first time. According to employment trends data released by Statistics Korea on Wednesday, self-employed accounted for only 19.9%, the lowest since statistical compiling. Ratio of the self-employed continued a downturn trend after reaching 30% range, and rose to 28% after the Asian financial crisis in 1997. It continued to drop, however, more noticeably during President Moon Jae-in’s term.
The ratio of self-employed tends to go down when the economy advances, and industrial structure grows more sophisticated. Unlike other advanced economies with over 30,000 dollars in income per capita, South Korea had noticeably high proportion of self-employed than other OECD countries. It is the sixth highest among 38 OECD members.
The issue with the recent decline, however, is that it is not caused by industrial advancement but the growing number of self-employed going out of business due to the pandemic. The income of the self-employed dropped dramatically while debt grew, impacted by strong social distancing practices enforced since July this year. The number of employers working on their own, by letting their employees go or those who have started their own business after losing their jobs has increased by 22,000 than last year. The number of self-employed is declining despite the increase in number of people starting business on their own, which shows that more self-employed are giving up their business. A recent survey showed that 40% of self-employed are seriously considering closing their business.
The government said that it would compensate for the losses for business impacted by the social distancing practices from July 7 to end of September, but these measures alone would not be reverse the downturn driven by the pandemic. The government should focus on measures to prevent the self-employed going out of business from becoming jobless. We should be mindful that there are many previous self-employed people who are struggling to find jobs because they lack professional expertise, while small and mid-sized businesses are experiencing labor shortage. The government needs to expand training for these people to support and facilitate career change and find new jobs.