'Two Years of COVID-19' Self-Employed Cry Out... 40% Consider "Closing Business"

65.4% of Self-Employed Expect Sales and Profit Decline This Year
Most Common Reason for Considering Closure: 'Performance Deterioration'... 28.2% Say 'No Alternative, Cannot Close'
Calls Grow for Expanded Consumer Stimulus, Financial Support, and Compensation for Business Losses

Self-employed individuals and civic groups held a press conference on the 5th in front of the Constitutional Court in Jongno-gu, Seoul, titled "One Year Since Filing a Constitutional Complaint, Condemning the National Assembly and Government's Loss Compensation Measures Full of Unconstitutionality." / Photo by Moon Honam munonam@

[Asia Economy Reporter Lee Hye-young] As the COVID-19 pandemic prolongs, a survey released on the 16th revealed that pessimistic perceptions among self-employed individuals, who are pushed to the brink due to sharp sales declines and are considering business closures, have yet to find an exit.

The Federation of Korean Industries (FKI) commissioned market research firm Monoresearch to conduct the '2021 Performance and 2022 Outlook Survey' targeting 500 self-employed individuals in daily life-related sectors such as restaurants and retail. The results showed that more than half expect continued business difficulties this year, including decreases in sales and net profits. Additionally, 4 out of 10 self-employed respondents are considering closing their businesses.

65.4% of Self-Employed Expect Sales and Net Profit Declines Again This Year

Among the self-employed, 65.4% anticipated that their sales this year would decrease compared to the previous year, and 63.6% expected a decline in net profits. On average, sales in 2022 are projected to decrease by 9.4% and net profits by 8.4% compared to the previous year.

The FKI analyzed that although the projected declines in sales (20.1%) and net profits (20.0%) compared to the previous year in 2021 were steeper, the impact of COVID-19 on self-employed individuals appears to be intensifying over time.

Employment outlooks were also negative. Regarding employees who receive wages excluding themselves and family members, 65.2% planned to maintain employment levels similar to last year, while 32.8% considered reducing staff. Only 2.0% of self-employed respondents expected to increase their workforce.

40.8% of Self-Employed Considering Business Closure... Many Respondents Say 'No Alternatives'

Due to the impact of COVID-19, 40.8% of self-employed individuals are currently considering closing their businesses. The reasons cited for considering closure included ▲declines in sales and net profits (28.2%) ▲worsening financial conditions and loan repayment burdens (17.8%) ▲fixed cost burdens such as rent and labor costs (17.5%) ▲low prospects for economic recovery even after the end of COVID-19 (16.7%).

Among those not considering closure, the most common response was 'no special alternatives' (23.8%) rather than expectations for improved business conditions. This was followed by ▲expectations for economic recovery after the end of COVID-19 (19.5%) ▲business sluggishness but manageable financial burdens (14.3%) ▲perceptions that entering new businesses or changing industries would be riskier (12.5%).

The biggest anticipated challenge this year was 'limitations in overall consumer sentiment recovery due to the prolonged COVID-19 pandemic' (30.7%). Other difficulties included limits to offline sales improvement due to social distancing and business hour restrictions (22.9%), increased material purchase costs due to inflation (12.0%), loan repayment burdens from rising interest rates and maturities (10.1%), and increased rent and tax burdens (9.8%).

To revitalize neighborhood commercial districts, the most frequently cited government support measure to expand was 'support for boosting consumption' (16.0%). This was followed by ▲expansion of financial support such as low-interest loans (14.1%) ▲increased compensation for business losses (13.3%) ▲restraining or reducing public utility fee hikes (11.3%) ▲expansion of financial aid (9.7%).

Yoo Hwan-ik, head of the Industry Division at FKI, emphasized, "Usually, at the beginning of the year, there might be expectations due to peak seasons like Lunar New Year, graduations, and school admissions, but with COVID-19 and social distancing continuing, the sighs of self-employed individuals deepen this year as well. Support measures are needed to improve consumer sentiment, compensate for losses, and minimize the shock to self-employed individuals ahead of the interest rate hike period."

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