"Business Difficulties Due to COVID-19 Impact... 39.4% of Self-Employed Considering Closure"

[Asia Economy Reporter Jeong Hyunjin] As the fourth wave of COVID-19 and prolonged social distancing measures have caused increasing business difficulties for self-employed individuals, a survey revealed that 4 out of 10 are considering closing their businesses.

On the 1st, the Korea Economic Research Institute under the Federation of Korean Industries commissioned market research firm Monoresearch to conduct a 'Self-Employed Status Survey' targeting 500 self-employed respondents nationwide. The results showed that 39.4% of self-employed individuals are currently considering business closure. The survey was conducted from the 10th to the 25th of last month, focusing on eight industries severely impacted by COVID-19: food service, wholesale and retail, education services, transportation and warehousing, manufacturing, sports and entertainment facilities, lodging, and other services.

(Data provided by Korea Economic Research Institute)

Among those considering closure, 94.6% cited 'business downturn' as the reason. Specifically, 'decreased sales' (45.0%) was the most common reason, followed by 'fixed cost burden' (26.2%) and 'loan repayment burden and worsening financial conditions' (22.0%). Additionally, 91.4% of those contemplating closure expected to shut down within one year. Regarding the expected timing of closure, 33.0% anticipated it within three months, 32.0% within three to six months, 26.4% within six months to one year, 8.1% within one year to one year and six months, and 0.5% cited other timings.

Among all self-employed participants in this survey, 9 out of 10 reported significant decreases in sales and net profits after the fourth wave (starting on the 6th of last month) compared to the first half of this year. The average monthly sales of respondents decreased by 26.4%, and the average monthly net profit also declined by 25.5%.

Regarding loan status, 60.4% of respondents reported that their loan amounts decreased compared to January of last year, just before the COVID-19 outbreak. Among them, 29.5% reduced loans due to concerns about future interest rate hikes, 22.9% found it difficult to obtain additional loans due to loan limits, and 19.6% reduced existing loans anticipating business closure.

Conversely, respondents who reported increased loans cited reasons such as fixed cost expenditures including rent and labor costs (49.0%), repayment of existing loan interest (23.6%), and material costs (16.7%).

As for government policy support measures to resolve financial difficulties, self-employed individuals prioritized 'expanding compensation for business losses due to social distancing guidelines' (28.4%). Other key policy tasks included direct rent support (24.9%), expanded vaccination (16.5%), and extension of loan repayment deferral deadlines (12.7%).

Choo Kwang-ho, Director of Economic Policy at the Korea Economic Research Institute, stated, "Self-employed individuals are experiencing the most difficult times due to prolonged social distancing measures, and securing funds through loans is now challenging. We must focus all efforts on overcoming their difficulties through rapid herd immunity formation and optimizing social distancing."

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