Gyeonggi Job Foundation Releases Report Analyzing Changes in Self-Employment Environment and Rise in Business Closures

The Gyeonggi-do Job Foundation published the "GJF Employment Issue Report 2026-01" on March 20, analyzing changes in the self-employment environment and the increasing trend of business closures.

In the report, the foundation identified four main causes behind the crisis facing self-employed businesses in the province.

First, the foundation analyzed that private consumption remained sluggish, with average growth of only 0.9% from the first quarter of 2023 to the second quarter of 2025. In addition, the demand for daily-life service sectors such as restaurants, small pubs, fried chicken shops, and karaoke rooms declined even more sharply than the overall decrease in consumption. The foundation diagnosed this as a result of structural changes in consumption patterns, such as a reduction in face-to-face spending and the expansion of personalized consumption.

Gyeonggi-do Job Foundation Employment Issue Report

In particular, the foundation found that the growth of online retail has led to the decline of brick-and-mortar specialty stores, resulting in more business closures and an increase in vacant commercial properties. However, the foundation explained that the surpassing of 1 million business closure cases also reflects the increase in closures among non-store retailers, where openings and closings occur more frequently.

Furthermore, the foundation pointed out that loans to self-employed businesses rose sharply during the period of low interest rates and COVID-19, but the subsequent rise in interest rates and decrease in demand have intensified management pressures, having a negative impact on self-employment. The volume of loans to self-employed business owners increased from 701 trillion won in the first quarter of 2020 to 1,072 trillion won in the third quarter of 2025. The loan delinquency rate also rose from about 0.5% in 2022 to 1.8% in 2025.

Choi Kyungsoo, Senior Research Fellow at the Gyeonggi-do Job Foundation, said, "The current crisis in self-employment is the result of severely contracted consumption, changes in consumption patterns, and the effects of industrial and technological innovation, such as the expansion of e-commerce. While self-employment will continue to develop as an important pillar of the economy, there will be significant changes in the composition of business types going forward."

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