Increase in Small Business Startups, Domestic Demand and Employment Recovery... Self-Employed Face Challenges

Startup Companies and Service Industry Lead Rebound in 4 Months
Increase in SME Production, Continued Decline in Self-Employed Businesses

[Image source=Yonhap News]

[Asia Economy Reporter Kim Heeyoon] Although the number of startup companies has increased significantly and domestic demand and employment indicators show improvement trends, it has been found that self-employed business owners continue to face management difficulties.

According to the ‘KOSBI Small and Medium Business Trends May 2021’ report released by the Small and Medium Business Institute on the 30th, manufacturing production in March turned to an increase from -5.9% year-on-year to +2.0%. The factory operating rate (70.9%) rose by 1.1 percentage points compared to the previous month, recovering to the 70% level for the first time in four months.

The number of startup companies in March rebounded after four months, rising 16.7% (18,570 companies) year-on-year to 129,719 companies. Startups in knowledge-based service sectors such as Information and Communication (+51.5%), Professional, Scientific and Technical (+33.5%), and Creative, Arts and Leisure (+21.7%) showed significant increases.

Domestic demand also showed signs of recovery. Retail sales in March (42.5102 trillion KRW) increased by 13.5% year-on-year for the third consecutive month, marking the second highest figure since the survey began. In particular, face-to-face business types such as department stores (+62.4%), duty-free shops (+31.9%), and specialty retail stores (+17.7%) improved significantly, and sales of semi-durable goods (low-priced products usable for over a year) such as clothing (+47.8%) and shoes and bags (+36.3%) performed well.

Exports also increased. Small and medium enterprise exports in April expanded their growth rate from +16.9% year-on-year to +26.6%. Exports, mainly to emerging markets, rose by 9.7 percentage points compared to the March year-on-year growth rate (+16.9%). The year-on-year export growth rate to major countries also showed an expanded increase. Large enterprise exports increased by 46.4% year-on-year.

Employment indicators also improved. Employment in small and medium enterprises in April (24.408 million people) increased by 1.9% (465,000 people) year-on-year, showing a wider increase than the previous month (+134,000 people). By industry, construction (+6.6%, +125,000 people) and accommodation and food services (+2.7%, +55,000 people) increased, while manufacturing (-1.7%, -59,000 people) and wholesale and retail trade (-4.8%, -166,000 people) decreased. The number of self-employed (5.545 million people) decreased by 0.7% (37,000 people) year-on-year, and self-employed persons with employees recorded a decline for 29 consecutive months.

A representative from the Small and Medium Business Institute said, "The number of startup companies is increasing significantly, and domestic demand and employment indicators continue to improve," adding, "However, it is necessary to seek ways to improve the quality of employment and strengthen the competitiveness of self-employed business owners."

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