Self-employed earn less than salaried workers

Households where the main breadwinner is self-employed earn significantly less than those composed primarily of salaried workers on a month-to-month basis, with 9 percent of those in the former category now categorized as “relatively poor,” according to a study by a government-run think tank yesterday.

The average monthly income of self-employed households was 3.5 million won ($3,258) this year, 700,000 won below what salaried households pull in, the Korea Institute for Health and Social Affairs (Kihasa) said.

Moreover, three in 10 of this underprivileged subgroup dedicate 20 percent of their living expenses to their children’s education, it added.

Kihasa surveyed 11,082 businesses with fewer than five employees and found the average monthly income of the self-employed stood at 3.467 million won, while salaried workers pulled in 4.199 million won. The average income of households in Korea this year is 3.842 million won.

Of the self-employed, 2.3 percent of households were classified as “absolutely poor,” meaning they earn less than the minimum cost of living, while 8.8 percent were deemed “relatively poor,” meaning they earn less than half the national average.

The income of self-employed individuals living in large cities with high levels of education tended to be higher.

By age group, self-employed baby boomers born between 1964 and 1967 earned the most in this group, or 47.14 million won a year, while those born before 1954 earned 32.22 million won.

Overall, self-employed households spend 2.41 million won on living expenses each month on average, leaving them with 1 million won of disposable income from their 3.46 million won paychecks, the survey showed.

They spent 23.7 percent of their income on food, 16.7 percent on education, 2.4 percent on medical bills and 29.8 on other expenses.

“As this survey excluded unregistered and ‘portable’ businesses, there is a possibility that not all petty merchants were reflected in it. Nevertheless, we could confirm that the income level of self-employed households was significantly lower than that of salaried workers’ households, and that it was below the average income level,” said Chung Hong-won, a research fellow at Kihasa.

By Kim Jung-yoon [kjy@joongang.co.kr]