Small Business Owners and Employment-Vulnerable Groups Receive 'Tailored Support'... Direct Expenditure Excluding Loans Reaches 7.7 Trillion Won

KRW 4.1 Trillion Cash Payment to Small Business Owners Starting April 11
Efforts Also Focused on Supporting Litigation, Market Access, and Sales Recovery

[Sejong=Asia Economy Reporters Kim Hyun-jung and Jang Se-hee] The new measures related to COVID-19 announced by the government on the 29th differ in direction from the previous first and second rounds of emergency disaster relief payments, as they focus on "intensive support" for small business owners and vulnerable employment groups. A notable feature is that the measures focus on the affected groups whose livelihoods have been hit by the prolonged COVID-19 crisis, aiming to provide means for recovery such as reemployment or securing sales channels. However, concerns remain about whether the effects of these measures will be sustainable depending on vaccine efficacy and the possibility of further spread.

The "Tailored Damage Support Measures in Response to the Third Wave of COVID-19," jointly announced by the Ministry of Economy and Finance and related ministries on the 29th, are characterized by targeting specific affected groups for prompt support. The scale of direct government expenditure, excluding rent and special loan support, amounts to 7.7 trillion won. Of this, about 53%, or 4.1 trillion won, will be paid in cash directly to small business owners starting from the 11th of next month with minimal documentation. This is interpreted as a measure considering the criticism of the slow pace of the first and second rounds of emergency disaster relief payments, which targeted the entire population and small business owners affected by sales losses.

The government's principle for supporting 2.8 million small business owners announced that day is twofold. For businesses subject to physical restrictions due to COVID-19, such as closed businesses (3 million won) and restricted businesses (2 million won), support payments will be provided regardless of the scale of sales damage or rent burden. For general businesses, those with sales decreased compared to last year and annual sales of 400 million won or less will receive 1 million won. In this process, the government will use public data from the National Tax Service and the National Health Insurance Service to provide cash payments upon application without requiring supporting documents. Accordingly, small business owners in closed businesses can receive up to about 6.5 million won in support, including the first employment stabilization subsidy (150,000 won), the New Hope Fund (2 million won), and this new support fund.

The government will also implement a small business rent loan program targeting 400,000 people with a scale of 1 trillion won. Closed businesses can receive loans up to about 10 million won at a low interest rate of 1.9%, and restricted businesses will be supplied with a total of 3 trillion won in loans with interest rates ranging from 2% to 4%. The guarantee fee will also be reduced by 0.3% to 0.9 percentage points over five years. Additionally, the income and corporate tax credit rate for landlords who voluntarily reduce rent will be expanded from 50% to 70%, and small business owners who apply will be allowed to defer or exempt payment of employment, industrial accident insurance, and national pension premiums for three months from January to March. During the same period, electricity and gas bill payments can also be deferred, with installment payments available until September next year. The government will conduct a total of 1.6 trillion won in rent and special loan projects targeting small business owners. This figure includes 1.2 trillion won for small business rent and special loan and guarantee support, and 400 billion won for ski resorts, lodging facilities, and special employment type livelihood expenses projects.

For 870,000 special employment and freelance workers whose income has decreased due to the prolonged COVID-19 situation, the government will also disburse income stabilization funds totaling 500 billion won, with up to 1 million won per person. Visiting and care service workers numbering 90,000 and corporate taxi drivers numbering 80,000 will each receive 500,000 won.

Furthermore, the government is putting effort into supporting small business owners' recovery, sales channels, and sales restoration. For 160,000 closed small business owners, the "Closed Store Rechallenge" incentive payment of 500,000 won will be extended, and 10,000 personnel supporting the transition to non-face-to-face (untact) services will also be supported. Small-scale ancillary businesses such as winter sports facilities, including sports goods stores and nearby ski rental shops affected by strengthened quarantine measures, will receive 3 million won each.

To proactively respond to worsening employment, the employment retention subsidy rate for restricted and closed businesses will be increased to 90% for three months. Travel industry workers and others can receive 500,000 won per month for three months, totaling 1.5 million won, and new livelihood stabilization fund loans will be provided to special employment workers not enrolled in industrial accident insurance.

The government also plans to prevent re-spread through strengthened COVID-19 quarantine measures. It will invest 400 billion won to expand quarantine response infrastructure such as negative pressure beds, equipment, and personnel, and provide temporary hazard pay to about 3,000 nursing staff working in severe patient hospitalization beds. Experts have expressed concerns that if the spread of COVID-19 continues, these measures may soon reach their limits. Professor Sung Tae-yoon of Yonsei University's Department of Economics said, "While direct support to affected industries is the right direction, the damage could increase further depending on the vaccine distribution situation in the second quarter."

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