Self-employed business income plunges in 2020

Economy

Published: 28 Dec. 2021, 17:27 Updated: 28 Dec. 2021, 18:19

Self-employed business income plunges in 2020

Shop owners in a commercial district in Gwangjin District, eastern Seoul, on Dec. 27 turn lights off for an hour in protest of the government's Covid-19 related policies, including social distancing regulations and support. [YONHAP]

The self-employed in Korea suffered a dramatic drop in earnings in the first year of the pandemic, a recent study showed.

In 2020, their "operating profit" fell more than 40 percent.

According to the joint study by Statistics Korea and the Ministry of SMEs and Startups released Tuesday, in 2020, the country had 2.9 million self-employed businesses, up 4.7 percent. In 2019, the number of self-employed rose 1.1 percent.

The rise in 2020 was in part attributed to people struggling to find jobs and seeking some income through modest business ventures.

People self-employed in the hotel and restaurant business category rose 7.5 percent, or 49,000. In manufacturing, the total was up 2.7 percent, or 24,000.

On average, self-employed income declined 43 percent, with self-employed businesses reporting an average of 19 million won ($16,100) in surpluses a year, from 33 million won in 2019.

That is about 1.5 million won a month.

The minimum living expenses for a two-person household in 2020 was 1.8 million won.

Businesses affected the most were those in arts, sports and leisure, where operating profit fell 85.2 percent from an average of 20 million won in 2019 to 3 million won.

In education services, which includes hagwon, income declined 66 percent, from 22 million won to 8 million won.

The study found that 60 percent of the self-employed small business owners were in debt. That's up 8.1 percentage points from 2019.

Total debt for the self-employed in 2020 was 294.4 trillion won, up 19.3 percent. Each owed an average 169 million won.

Of all self-employed businesses, 32.2 percent were owned by those in their 50s.

In 2020, 182,000 of people in their 20s owned self-employed businesses, up 163.6 percent.

While 64 percent of the self-employed business owners said they started their businesses because they wanted to be their own bosses, 6.8 percent said they did it because they were struggling to find a job.

That's a 1 percentage point increase compared to the 5.8 percent in 2019.

The number of self-employed arts, sports and leisure businesses fell 20.5 percent, while the number of retail self-employed businesses fell 16.7 percent.

Nearly 68 percent of the self-employed supported government subsidies, 33 percent supported loans from the government, and 21.4 percent wanted a decrease in the costs of the social insurance programs — the National Pension, the Employment Insurance System, Korea Workers' Compensation Insurance and National Health Insurance.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]