Half of SMEs Face "Difficulty" in Lunar New Year Funds? Bonus Payment of 620,000 Won

Photo by Asia Economy DB

[Asia Economy Reporter Moon Hyewon] It has been revealed that one out of two small and medium-sized enterprises (SMEs) finds it difficult to pay Lunar New Year bonuses to their employees.

According to the results of the "2020 SME Lunar New Year Fund Demand Survey" conducted by the Korea Federation of SMEs on 808 SMEs nationwide, it was found on the 13th that half (49.7%) of SMEs are struggling with fund management for the Lunar New Year.

The main reasons for financial difficulties were "poor sales" and "rising labor costs" (each 52.9%), followed by "increased raw material prices" (22.4%), "delayed collection of sales proceeds" (22.2%), "frozen or reduced delivery prices" (20%), and "difficulty in using financial institutions" (10.2%).

SMEs responded that they need an average of 241.9 million KRW in funds for this year's Lunar New Year, an increase of 21.3 million KRW compared to last year (220.6 million KRW).

SMEs that have not secured Lunar New Year funds plan to use methods such as "payment deferral" (49.6%), "early collection of delivery payments" (39.8%), and "borrowing from financial institutions" (30.9%) to secure funds. Those with "no countermeasures" accounted for 27.9%.

The percentage of companies that responded they "plan to pay" Lunar New Year bonuses (in cash) this year was 50.1%, down 1.8 percentage points from last year. For fixed amount payments, the average per person was 624,000 KRW, and for fixed rate payments, 46.3% of the basic salary was to be paid.

Regarding Lunar New Year holiday plans, 89.5% of companies responded that they will take a 4-day holiday.

Kim Kyung-man, Head of the Economic Policy Division at the Korea Federation of SMEs, said, "Last year, domestic demand stagnated for a prolonged period and the global economic situation was uncertain, causing overall sluggishness in manufacturing, service, and construction industries. Although the SME loan environment has improved due to strengthened household loan regulations, SMEs still complain of financial difficulties due to worsening business conditions."

This content was produced with the assistance of AI translation services.