COVID-19 Loss Compensation Act, Support Expansion to SMEs Planned

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] The ruling party and government have decided to significantly expand the scope of compensation under the 'COVID-19 Self-Employed Loss Compensation Act' to include not only small business owners initially discussed but also workplaces with five or more employees, such as small and medium-sized enterprises (SMEs).

According to the Democratic Party of Korea and the government on the 25th, the ruling party and government will unveil the amendment to the Small Business Support Act, which centers on loss compensation for the self-employed, at the high-level ruling party-government-civil society council meeting on the 28th and aim to legislate it within March. The compensation targets are self-employed individuals who have been directly subjected to administrative regulations such as gathering bans and business restrictions due to COVID-19.

While the basis for loss compensation will be established in the Small Business Support Act, an exception clause will be stipulated to allow workplaces exceeding the size of small business owners, such as SMEs, to receive loss compensation. This is because under current law, the scope of small business owners is limited to fewer than five regular employees (service industry) and fewer than ten (manufacturing, construction, transportation). Additionally, for general industries that have not been subject to gathering bans or business restrictions but are experiencing business difficulties due to infectious disease outbreaks like COVID-19, 'damage support' will be provided based on the existing Small Business Basic Act.

The government plans to assess losses incurred by small business owners and self-employed individuals on a case-by-case basis and provide compensation accordingly. To this end, a Loss Compensation and Damage Support Deliberation Committee (tentative name) will be established under the Ministry of SMEs and Startups. After review by the committee, the Minister of SMEs and Startups will make the final decision on compensation. This structure is similar to the 'COVID-19 Loss Compensation Committee' under the Ministry of Health and Welfare.

The ruling party and government have decided not to apply the self-employed loss compensation retroactively. However, losses incurred 'after the law is promulgated but before it is enforced' will be compensated, meaning that small business owners and self-employed individuals newly subjected to business restrictions as early as March could become beneficiaries. The ruling party and government aim to complete the amendment to the Small Business Support Act within March and implement it around August to September.

An official from the Ministry of Economy and Finance stated, "This is still under discussion, and nothing has been decided."

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