Estimated Losses of Small Business Owners Reach 1.3 Trillion Won... Ruling and Opposition Parties Criticize Government with "Why Not Give It?" and "Driving the Final Nail" Remarks

On the 25th Loss Compensation Legislative Hearing, Small Business Owners Continue to Criticize
Government Reluctant on Controversial Retroactive Application

[Asia Economy Reporter Oh Ju-yeon] At a legislative hearing held to prepare compensation measures for small business owners and self-employed individuals who suffered losses due to COVID-19 administrative measures, complaints from small business owners and the self-employed continued. Lawmakers from both ruling and opposition parties, who had voiced a unified stance on the passage of the Loss Compensation Act, strongly criticized the government for its lukewarm attitude, citing issues of fairness and financial concerns.

At the legislative hearing on loss compensation for small business owners and the self-employed held by the National Assembly's Industry, Trade, and Small and Medium Venture Business Committee on the 25th, lawmakers from both sides reiterated the need for retroactive application of loss compensation. However, the government repeated its existing position that retroactive application is not possible.

Jo Ju-hyun, Director of the Small Business Policy Office at the Ministry of SMEs and Startups, stated, "For 680,000 business sites, the estimated losses due to government measures from August last year to February this year amount to 1.3 trillion KRW from an operating profit perspective, and about 3.3 trillion KRW including fixed costs. However, the Ministry of SMEs and Startups' support funds total 5.3 trillion KRW, and local governments have separately provided about 780 billion KRW."

According to materials submitted by the Ministry of SMEs and Startups and related ministries to the Industry Committee that day, the government tentatively estimated the total losses of small business owners due to gathering bans and business restrictions after COVID-19 at 3.3 trillion KRW. The decrease in operating profit for small business owners was about 1.3 trillion KRW, and fixed costs such as rent and labor costs were estimated at about 2 trillion KRW. This estimate covers a total of 677,941 businesses in sectors subject to gathering bans and business restrictions, for losses from August 16 last year to February 14 this year.

The Ministry of SMEs and Startups stated that the government and local governments have already provided about 6.1 trillion KRW in total, including 5.3 trillion KRW in support funds from the ministry and 800 billion KRW from local governments, over five rounds. They viewed the amount of support already paid as exceeding the estimated losses. They judged that 95.4% of all small business owners fall under this when excluding fixed costs and based on operating profit. There was even talk that in cases of additional loss compensation, recovery of funds might be necessary if overcompensation occurs. This was explained as a matter of 'fairness.' Lawmakers from both sides strongly refuted this.

Jo Jung-hoon, a member of the Transition Korea party, said, "The government has said it couldn't provide funds due to lack of money, but the submitted report calculates estimated losses at 1.3 trillion KRW. Having already paid 5 trillion KRW, I don't understand why they say retroactive loss compensation cannot be done." Regarding the travel industry, which was excluded from support, he asked, "What difference is there between a coin karaoke closing due to administrative orders and a travel agency closing due to COVID-19 damage?" and questioned, "Who does the government consider small business owners?"

Choi Seung-jae, a member of the People Power Party, criticized the government's statistical data, pointing out that "the reality is not reflected." He said, "They have not grasped the actual situation." Yang Yi-won-young of the Democratic Party also said, "The estimated loss was based on operating profit, but do you know the operating profit margin of the food service industry? It is 11%," and confirmed the difference between sales and operating profit with a representative of the food service industry present at the hearing. The representative explained that sales were 84 million KRW and operating profit was in the 8 million KRW range, to which the lawmaker responded, "The Ministry of SMEs and Startups has reduced the damage scale to one-tenth."

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