More business owners are running shops alone
Inside one bar, Mr. Kim, 42, has been single-handedly running the place every night since opening it in the summer. He would appreciate more help, but he currently has no plans to hire because the bar is so small and the earnings do not allow him to bring someone onboard and pay the minimum wage.
“I don’t make much,” Kim said, “only enough to feed my family and pay the rent.”
There are many more business owners like Kim who run shops by themselves, and their numbers are increasing, according to the latest figures released Wednesday by the Ministry of Strategy and Finance and Statistics Korea. As of August, the number of self-employed businesses with only one worker, namely the owner, has reached 4.2 million, an increase of 2.8 percent from 2015.
On the other hand, the number of self-employed businesses that hired help shrank 2.3 percent to 1.56 million. These businesses include not just small ones like restaurants, bars and cafes but also independent contractors like truck drivers.
The report comes as debate rages on over a proposed increase in minimum wage. In July, a state commission approved a plan to raise the minimum wage next year by 16 percent to 7,530 won ($6.75) per hour, the biggest jump since 2001. President Moon Jae-in’s goal is to raise the minimum wage to 10,000 won by 2020.
While the government estimates that between 2.8 million and 4.6 million people will benefit from a higher minimum wage and improved living conditions, business owners, particularly those running small shops and franchise stores, have raised concerns about the higher financial burden.
“With unfavorable situations like [restructuring] in the shipping industry, it seems that those who worked in manufacturing have gone onto starting their own businesses,” said Bin Hyun-joon, head of Statistics Korea’s employment division.
The study found that in the last two years, the number of people who have started their own businesses - and the number of family members working for free - have inched up 0.4 percent from 2015 to 6.9 million. Of that number, 83 percent are self-starting entrepreneurs, up nearly 1.4 percentage points.
While 71 percent said they opted for self-employment because they wanted to run their own business, 16 percent said they opened up shop largely because they had trouble getting a job elsewhere. The latter figure is a nearly 10 percentage point increase from two years ago.
While business owners in their 50s accounted for the majority in the past two years, the over-60 age group saw the biggest increase in number of people opening businesses. An additional 141,000 people in their 60s and up started businesses, up 7.5 percent from 2015. Other age groups saw a drop.
The main source of finance for self-starters, according to the government survey, was their own pockets, with personal finances accounting for nearly 69 percent of financial sources.
Borrowing from financial institutions including banks, insurance companies and credit unions came in second with close to 32 percent.
The government suggested that most business owners were relying on their own money, including retirement savings and severance money, because it is difficult to secure investment elsewhere, and when a business flops, many self-employed entrepreneurs lose their savings.
BY LEE HO-JEONG [firstname.lastname@example.org]
More in Economy
Consumer price gains pick up speed in November
Life expectancy up 7 months for Koreans born in 2019
OECD knocks tenth of a point off Korea's 2020 growth
Bos taurus philately
$504 billion budget for 2021 ready for passage