"Decrease in SME Employment Due to COVID-19 Largest Since Financial Crisis"

KOSBI SME Trends in April by Small and Medium Business Institute

On the 21st, Myeongdong in Jung-gu, Seoul is quiet due to the impact of the novel coronavirus disease (COVID-19). Photo by Moon Honam munonam@

[Asia Economy Reporter Moon Hyewon] The number of employees in domestic small and medium-sized enterprises (SMEs) recorded the largest decline since the 2008 financial crisis due to the impact of the novel coronavirus infection (COVID-19).

According to the 'April KOSBI SME Trends' report released on the 23rd by the Trend Analysis Team of the Korea Small Business Institute, the number of employees in domestic SMEs (under 300 employees) last month was 23.996 million, a decrease of 281,000 compared to the same month last year. In particular, companies with 5 to 299 employees saw a reduction of 190,000 due to the slowdown in the service, manufacturing, and construction industries caused by COVID-19. During the same period, the number of employees in companies with 1 to 4 employees decreased by 91,000, mainly in accommodation and food services and wholesale and retail trade, which have a high proportion of face-to-face contact.

Jung Yutak, a senior researcher at the Korea Small Business Institute, said, "Looking at the recent economic trends of SMEs, as the impact of COVID-19 has materialized, overall production activities and exports have contracted, employment indicators and sentiment indicators have worsened significantly, and the uncertainty of the economic conditions for SMEs is intensifying."

Manufacturing production in SMEs decreased by 5.7% in February this year compared to the previous month. Amid shrinking domestic demand and supply chain disruptions, the average operating rate in February (69.6% in February) recorded the lowest level since the financial crisis.

Service industry production in February increased by only 0.6% compared to the same month last year, showing sluggish performance mainly in industries with a high proportion of face-to-face contact. Exports also decreased by 2.1% on a daily average basis last month when excluding the effect of increased working days. It is analyzed that the decline continued mainly in major export countries such as China.

The SME Business Health Index (SBHI) for last month was -24.4 points, with a sharp drop especially in the service sector. The financial condition SBHI for small and medium manufacturing industries fell to -10.1 points, the lowest level since the financial crisis.

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