Last year, the number of business owners who reported closures surpassed 1 million for the first time ever. The closure rate has also been on the rise for two consecutive years. The government plans to induce livelihood recovery through a supplementary budget.
According to the National Tax Service statistics on taxes on the 6th, the total number of business owners who reported closures last year was 1,008,282. This figure represents an increase of 21,795 from the previous year, marking the first time since the statistics began being collected in 1995 that the number of closures surpassed 1 million. The closure rate also rose slightly to 9.04%, up from 9.02% the previous year, reaching the highest level since 2020 (9.38%).
By industry, there were 299,642 retail business closures, accounting for 29.7% of the total, which was the highest. The restaurant industry followed at 15.2%, and the real estate industry at 11.1%. Combined, retail and restaurant businesses make up nearly half of all closures. Among the reasons for closure, 'business recession' accounted for 506,198 cases, or 50.2% of the total. This is the first time since the immediate aftermath of the financial crisis in 2010 that the proportion has exceeded half.
Closures are no longer limited to small individual businesses such as simplified businessmen but are also spreading to general businesses and corporations. The closure rate for simplified businesses was the highest at 12.89%, while general individual businesses stood at 8.77% and corporate businesses at 5.80%. There is also a notable increase in closures in industries closely related to daily life. For example, the number of coffee shops, a typical startup in self-employment, has decreased by 743 compared to the same period last year, totaling 95,337 as of the first quarter of this year, and convenience stores also dropped by 455.
The spread of such closures is interpreted as a complex result of sluggish domestic demand and structural problems. According to the Statistics Korea industrial activity trend, the retail sales value constant index, which represents consumer goods consumption, decreased by 0.3% in the first quarter of this year compared to the same period last year. Retail sales have been in decline for three consecutive years since the second quarter of 2022. The structure of repeated startups and closures, livelihoods-based startups among the elderly, and excessive competition are also cited as factors that weaken the self-employment sector. In fact, as of 2022, the proportion of self-employed and non-wage workers in Korea reached 23.5%, which is two to three times that of major countries like the United States (6.6%), Germany (8.7%), and Japan (9.6%).
To revive the sluggish domestic economy, the government has prepared two supplementary budgets this year. The first essential supplementary budget, passed in April, amounted to 12.2 trillion won and focused on specific areas such as wildfire recovery and tariff responses. The second supplementary budget, approved at a cabinet meeting, is approximately 20 trillion won and focuses on domestic recovery measures such as providing consumer coupons and debt relief for vulnerable self-employed individuals. When combining both supplementary budgets, about 30 trillion won has been urgently injected this year.