Yellow Umbrella Mutual Aid, Full-Scale Welfare Projects for Subscribers Launched This Year

Promulgation of the Amendment to the "Small and Medium Enterprise Cooperative Act"

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Lee Young) announced on the 4th that the amended "Small and Medium Enterprise Cooperative Act," which includes the establishment of grounds for welfare and profit projects for Yellow Umbrella Mutual Aid subscribers, has been promulgated.

The Yellow Umbrella Mutual Aid is a mutual aid system exclusively for small businesses and small merchants, operated by the Korea Federation of SMEs, where members pay a fixed amount monthly or quarterly and receive mutual aid payments in case of business closure or other management crises to stabilize their livelihood and support business recovery.

Contributions to the Yellow Umbrella Mutual Aid are eligible for income tax deductions up to 5 million KRW annually, and legally protected from seizure to ensure stable receipt of mutual aid payments. Thanks to these benefits, the number of subscribers has rapidly increased since its launch in 2007, exceeding 1,667,000 as of the end of last year. This means one out of every four small merchants is a subscriber. The total contribution amount reached 21.7 trillion KRW, surpassing 20 trillion KRW for the first time last year.

While the Yellow Umbrella Mutual Aid has grown quantitatively, welfare programs for subscribers have relied on indirect methods such as partnerships and consignment. In fact, a survey conducted among subscribers showed that 24.4% hoped for expanded welfare services as an additional benefit. Accordingly, the Ministry of SMEs and Startups has established a legal basis through this amendment to actively and diversely implement welfare projects for Yellow Umbrella Mutual Aid subscribers. A basis for requesting information to expedite mutual aid payments has also been newly established.

Previously, the Yellow Umbrella Mutual Aid could only conduct mutual aid payments and loan projects, but with this amendment, grounds have been established to carry out welfare and welfare projects, fund-raising projects, and related profit-making projects for subscribers. Most other mutual aid associations have legal grounds for welfare and profit projects and operate various profit-type welfare projects such as welfare centers.

Additionally, this amendment provides grounds to receive current information about the parties and their families from related agencies such as the Ministry of the Interior and Safety and the Court Administration to promptly pay mutual aid benefits. When mutual aid reasons such as business closure or death occur, payments must be made, but if the address or other information has changed since subscription, it was difficult to contact the party or their family.

Minister Lee Young stated, "The amended Small and Medium Enterprise Cooperative Act will be enforced from July 4, six months after the promulgation date, following the revision of subordinate statutes," and added, "We plan to actively reflect the opinions of small merchants and promote welfare projects so that subscribers can receive essential benefits through the Yellow Umbrella Mutual Aid not only in crisis situations such as business closure but also in normal times."

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