Self-employed are hit hard by tanking profits
The figure is the lowest since 2011, when it dipped to 0.7 percent.
The latest data shows a steep drop, as the growth rate hovered above 2 percent for the past two years.
The downbeat earnings affected the overall production of the service sector in 2017, where self-employment is dominant. Restaurant earnings fell by 3.1 percent last year compared to 2016, the highest drop since the institutions started keeping records in 2000.
The number of foreign tourists coming to Korea dropped by more than 23 percent last year. They were affected by China’s ban on group tours to Korea after Seoul deployed a U.S. missile shield that China believes threatens its security.
After Beijing imposed the restriction on tourists in March, the number of Chinese coming into the country fell sharply. Between January and October 2017, 3.5 million tourists entered Korea, compared to 7 million over the same period in 2016.
The reduction dealt a huge blow to Korea’s tourism industry, including small retailers, since Chinese people accounted for more than half of the total number of tourists.
Observers cited a steep increase in minimum wage under the Moon Jae-in administration as a factor that dragged down the profits of the self-employed. Since employers who pay the minimum wage are mostly self-employed shop owners or small-scale merchants or manufactures, higher labor costs lead to reduced profits and more layoffs of part-time workers.
The number of those employed in the lodging and dining services sector fell for nine straight months, and 54 percent of self-employed individuals said they now take home less income than a year ago, according to a survey by the Korea Economic Research Institute.
Besides these external factors, as more people choose to start their own businesses, it is becoming harder to maintain healthy sales and profit due to heavy competition.
Korea ranks third among members of the Organisation for Economic Co-operation and Development in self-employed workers, with nearly 5.6 million people operating their own business.
According to an OECD report published on Sunday, entitled “Entrepreneurship at a Glance,” Korea has 5.56 million self-employed people, putting it in third place after Mexico and the United States.
BY PARK EUN-JEE [firstname.lastname@example.org]