"2 Million Won Is Not Enough to Pay Rent... I Want to Close Down Immediately"

Small Business Owners Cry Out Louder Despite Disaster Relief Funds
No Hope for Improvement Even After Partial Compensation for COVID-19 Impact 'Helpless'
"Urgent Need for Policies Reducing Fixed Costs Like Electricity and Water Discounts Rather Than Short-Term Emergency Support"

On the 19th, the government strengthened social distancing measures in the metropolitan area to curb the explosive spread of the novel coronavirus infection (COVID-19). On this day, a notice of business suspension was posted at a karaoke room in the Youth Street of Jonggak, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Heeyoon] #For Kim Kijeong (alias), who runs a coin karaoke room in Haeundae, Busan, the nightmare began in early March. While anxiously enduring the spread of the novel coronavirus infection (COVID-19), confirmed COVID-19 cases occurred one after another at a coin karaoke room in Changnyeong, Gyeongnam. From that point, coin karaoke rooms came under intense scrutiny. Due to their characteristic frequent use by elementary, middle, and high school students, they became even more sensitive. Nearby large corporations even circulated rumors saying, "If a confirmed case comes out from going to a karaoke room, we will force retirement." Although the number of customers dropped to less than half, they could not close the business. This situation lasted for nearly half a year. They barely managed to pay rent and maintenance fees, but suffered a monthly deficit of 3.6 million won in labor costs. In mid-last month, social distancing was raised to level 2.5, forcing them to close entirely. Kim invested a total of 200 million won in facility investment and deposit for this karaoke room.

#Shin Jonghyun (alias)'s PC bang spends 7 million won monthly on fixed costs such as rent, maintenance fees, and dedicated PC bang line fees. Excluding the deposit, he invested 350 million won in 100 PCs and interior costs, but in recent months, he has been surviving on savings. Even during the period when the local government issued an administrative order to close the business, fixed costs such as rent had to be paid in full. At that time, all perishable ingredients were discarded. Shin said, "The disaster relief fund of 2 million won is far from enough, but we cannot even complain in frustration," adding, "We just hope the COVID-19 situation improves quickly so we can return to normal daily life."

The small business ecosystem is showing signs of collapse, especially in high-risk facilities for group infections. The government has invested 3.2 trillion won to stabilize small business management, but it is insufficient to recover the damage. The on-site response is a coexistence of resignation, anxiety, and coldness. Moreover, small business owners who have just opened after investing huge amounts of money and micro-merchants who live day-to-day are in a desperate situation.

Performance Outlook for Major Alley Commercial Sectors. Data = Federation of Korean Industries

"2 million won is not enough even to pay overdue rent" - Complaints that the situation after support is even more desperate

A 40-something business owner who opened a karaoke room in Daejeon earlier this year said, "2 million won is not enough even to pay overdue rent," adding, "There is no hope that the situation will improve next month, so if it weren't for the contract period, I would want to close the business even today." Workers in industries subject to gathering bans complain, "The cause of the COVID-19 resurgence lies elsewhere, but the damage is concentrated entirely on our side," but even those around them have no room to sympathize. Although the current government support can partially prevent damage during the resurgence period, they complain that with consumer sentiment frozen solid, they are at a loss about what to do afterward. If this situation continues, closure is an inevitable step.

Bang Gihong, president of the Korea Federation of Small Business Owners and Self-Employed, emphasized, "Due to the COVID-19 resurgence, some small business owners in industries subject to gathering bans have been driven to a situation where they want to close but cannot due to lack of funds," adding, "Broad support for rent and labor costs, along with policies to reduce accumulated fixed cost burdens such as temporarily discounting electricity, water, and gas fees, are urgently needed."

Expectations for economic recovery shattered by COVID-19 resurgence in August, leading to increased closure rates

Because the future is uncertain, small business owners' economic and psychological crisis has reached its peak. Cha Namsu, a research fellow at the Small Business Association, said, "There was great hope that the impact of COVID-19 would improve in June and July, but with the resurgence in August, that hope was shattered, leading to a surge in cases where self-employed people gave up, increasing closure rates," adding, "Rather than emergency support measures, policies that compensate for long-term damage caused by COVID-19 to reduce the burden of fixed costs and provide stability to self-employed people are needed to prevent worst-case scenarios like domino closures."

A survey conducted on the 10th by the Federation of Korean Industries targeting associations representing 22 major alleyway business sectors found that if COVID-19 prolongs, the net profit of alleyway businesses in the second half of this year is expected to decrease by 42% compared to the same period last year.

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