"Everyone's Starving to Death" Self-Employed on the Brink... Frustrated with 'Meager' Government Support

Second Supplementary Budget Allocates 600 Billion KRW in Loss Compensation Over 3 Months
Government Estimates About 960,000 Businesses Affected by Level 4 Social Distancing
Average 200,000 KRW per Business...Ruling Party Also Calls to "Increase Damage Support"

On the first day of Level 4 social distancing in the Seoul metropolitan area on the 12th, the streets of Hongdae in Mapo-gu, Seoul, are quieter than usual. Under the Level 4 measures, gatherings of up to 4 people are allowed before 6 p.m., and only up to 2 people are allowed afterward. Photo by Moon Honam munonam@

[Asia Economy Reporter Lim Juhyung] "I’m already at a loss about how to run my business.", "At this rate, we’re all going to end up on the streets."

As social distancing in the Seoul metropolitan area was raised to Level 4 the day before (the 12th) to curb the spread of COVID-19, anxiety among self-employed business owners is growing. They have had to endure business inconveniences due to quarantine measures over the past year, and there are concerns that raising social distancing to the highest level at this point could lead to large-scale bankruptcies.

Meanwhile, some self-employed business owners are criticizing the government for insufficient support for small business owners. They point out that the recently passed supplementary budget is unrealistic because the compensation amount is too small compared to the number of self-employed people who will suffer losses.

Prime Minister Kim Boo-kyum explained the background of raising social distancing to Level 4 at a Central Disaster and Safety Countermeasure Headquarters meeting held at the Government Seoul Office on the 9th, saying, "Quarantine is facing its greatest crisis as daily COVID-19 confirmed cases keep hitting record highs."

Level 4 is the highest stage in the revised social distancing system. Private gatherings are allowed up to four people before 6 p.m., but are limited to two or fewer after 6 p.m. Gatherings and events other than solo protests are completely banned, and only relatives can attend weddings and funerals.

Additionally, the government will maintain the ban on gatherings at entertainment facilities such as clubs, hunting bars, and emotional pubs, and will postpone easing quarantine guidelines that were to apply to vaccinated individuals.

Prime Minister Kim said, "I apologize for asking the people in the metropolitan area to once again give up their daily lives and endure pain. I am sorry for causing difficulties to small business owners and the self-employed," adding, "Although it will be difficult to fully recover the damage, the government will provide the best support possible under the Loss Compensation Act."

Prime Minister Kim Boo-kyum is presiding over the Central Disaster and Safety Countermeasures Headquarters (CDSCH) meeting on COVID-19 response held at the Government Seoul Office Building on the 9th. / Photo by Yonhap News

However, self-employed business owners on the ground strongly opposed the government’s policy. They pointed out that face-to-face businesses such as restaurants have already reached their limits due to quarantine measures, and suddenly raising social distancing to the highest level could lead to large-scale bankruptcies.

A restaurant worker in their 30s, A, working in the metropolitan area, expressed frustration, saying, "Level 4 social distancing is practically a death sentence for self-employed people."

He said, "We have been enduring deficits since March. Many businesses are already on the brink," and added, "If proper compensation is not provided, everyone will close their businesses."

B (32), who runs a grilled beef intestine restaurant helping his father, complained, "Of course, it’s better than nothing, but with monthly rent costing hundreds of thousands of won, a few rounds of disaster relief funds are not enough to survive."

On online communities mainly used by self-employed people, complaints erupted such as "If quarantine measures are to be strengthened, the government should compensate for the damage," and "At this rate, we will all starve to death."

Ryu Ho-jeong, a Justice Party lawmaker, is distributing hand signs that read "Retroactive Application of Loss Compensation" during the National Assembly plenary session on the afternoon of the 1st. / Photo by Yonhap News

Earlier, the National Assembly passed the "Small Business Protection and Support Act Amendment" (Loss Compensation Act), which mandates government compensation and support for small business owners who suffer losses due to gathering bans and business restrictions. Accordingly, the government allocated 600 billion won in the second supplementary budget for loss compensation. The plan is to provide 200 billion won per month over the third quarter (July to September).

The problem lies in the fact that the loss compensation amount is too small compared to the number of self-employed people who will suffer losses due to Level 4 social distancing. The government estimates that about 960,000 multi-use facilities in the metropolitan area will be affected by the social distancing upgrade. Simple calculations show that the loss compensation amount per business will be about 200,000 won per month.

The detailed provisions of the Loss Compensation Act have also sparked controversy. According to the bill, the retroactive application period is limited to three months from the date of enactment to implementation. Losses caused by past quarantine guidelines will only be partially compensated as damage support. The ruling party explains that rapid support is prioritized over spending time calculating accumulated losses, but opposition parties such as the People Power Party and the Justice Party condemned it as a "fake Loss Compensation Act."

The appearance of a traditional market that lost customers last year when the COVID-19 pandemic began. / Photo by Yonhap News

Given this situation, voices are emerging even within the ruling party calling for a reorganization of the supplementary budget to fully support self-employed business owners. Former leader Lee Nak-yeon, a candidate in the Democratic Party presidential primary, suggested on his Facebook on the 9th, "Let’s consider a new framework for the supplementary budget," adding, "We should focus more on damage support when considering the supplementary budget."

Another candidate, former Prime Minister Chung Sye-kyun, also urged, "Let’s stop the 80%, 100% debate on disaster relief funds. We must significantly expand the damage support funds for small business owners who will suffer due to Level 4 social distancing during the supplementary budget review process."

Experts emphasize the need for prompt support as tens of thousands of small business owners are expected to suffer losses, viewing it as relief for a social disaster.

Professor Kim Tae-gi of Dankook University’s Department of Economics pointed out, "The problem with the current Loss Compensation Act is that both the criteria for loss and compensation are ambiguous," adding, "Because the scope of loss is unclear, it takes a long time to calculate the damage amount, and if the compensation amount itself is about 200,000 won per person on average, it will not help small business owners at all."

He further suggested, "In Korea, disaster relief funds can already provide blanket support to small industries, self-employed people, and individuals. It is more important to approach this as disaster support and provide quick assistance rather than being confined to the framework of loss compensation."

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