SME Institute: Prolonged COVID-19 Crisis Leads to Employment Contraction in SMEs

Business owners struggling with management due to the impact of COVID-19 submitted related documents to receive employment retention support funds at the Daegu Employment Center on April 2. Photo by Yonhap News

[Asia Economy Reporter Moon Hyewon] As the COVID-19 pandemic prolongs, the decline in employment among small business owners has been expanding.

According to the 'KOSBI Small and Medium Enterprise Trends July Issue' published on the 26th by the Small and Medium Business Institute, the number of employees in small and medium enterprises (SMEs) as of last month was 24,392,000, a 1.6% (403,000) decrease compared to the same month last year.

In particular, micro-businesses with four or fewer employees saw a 3.5% (355,000) decrease during the same period, showing a relatively larger employment decline compared to SMEs with 5 to 299 employees (-0.3%).

The decrease in employment among small business owners with four or fewer employees has been increasing since April. The number of reduced employees rose from 289,000 in April to 314,000 in May and 355,000 in June.

On the other hand, SMEs with 5 to 299 employees recorded decreases of 49,000 in April, 149,000 in May, and 48,000 in June, indicating a mitigation of the employment shock. Employment in large enterprises increased by 2.0% to 2,664,000.

With the prolonged COVID-19 pandemic reducing workloads, working hours decreased in both large enterprises and SMEs. In April, the average monthly working hours for SME workers was 156.2 hours, down 9.3% (16.1 hours) from the same month last year, while large enterprises with 300 or more employees recorded 159.3 hours, a decrease of 8.4% (14.7 hours).

No Minseon, head of the Future Strategy Research Group at the Small and Medium Business Institute, pointed out, “The prolonged COVID-19 pandemic is expanding the decline in employment among micro small business owners,” adding, “It is necessary to explore various policy measures to maintain employment for small business owners, who hold a significant share of jobs in our country.”

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