Due to prolonged domestic recession, more than 200,000 self-employed individuals have reportedly closed their businesses over the past two months.
According to the Statistics Korea, as of Jan. 10, the number of self-employed individuals was recorded at 5.5 million, the lowest level since January 2023.
The number of self-employed individuals, which had been showing signs of recovery after the endemic, decreased by more than 3.5% (200,000) from 5.7 million in November.
By year, the number of self-employed individuals is lower than during the International Monetary Fund (IMF) financial crisis in 1997 (5.9 million), 1998 (5.61 million), and the global financial crisis in 2008 (6 million), 2009 (5.74 million).
Since 2009, the number of self-employed individuals has decreased to the 5 million range, maintaining a level of 5.6 to 5.7 million until it dropped to below 5.5 million due to COVID-19 in 2020. After decreasing to 5.49 million just before the endemic in January 2023, it continued to recover but sharply declined again at the end of last year.
It is believed that the rising prices have increased the number of self-employed individuals who can no longer endure the situation where domestic demand has not recovered.
According to a survey conducted last month by The Federation of Korean Industries targeting 500 self-employed individuals, respondents indicated that their biggest burdens are ▲raw material and material costs (22.2%) ▲labor costs (21.2%) ▲rent (18.7%) ▲loan repayment principal and interest (14.2%).
More than 4 out of 10 self-employed respondents (43.6%) indicated they are considering closing their businesses within three years.
The reasons for considering closure include ▲continuous deterioration in sales performance (28.2%) ▲uncertainty in economic recovery outlook (18.1%) ▲worsening financial conditions and burden of loan repayment (18.1%) ▲increased rent and labor costs (11.9%).
Kim Kwang-seok, head of the Economic Research Office at the Korea Economic Industry Research Institute, noted, "When the economy gets tough, wage workers are the first to cut expenditures on dining, personal services, and entertainment, which impacts self-employed individuals. The rising prices have led self-employed individuals to be unable to repay their liabilities, resulting in a chain of business closures."