[비즈한국] President Moon Jae-in has recently been praising himself, claiming that he has set the stage for economic recovery by successfully managing the COVID-19 pandemic. However, self-employed individuals are facing the worst possible situation, with their debts reaching record highs and business closures surging under the Moon Jae-in administration, which had promised to support the self-employed and small business owners.
At a meeting of senior secretaries on the 4th, President Moon stated, “The government has done its best to kill two birds with one stone—pandemic prevention and economic growth—amidst the national crisis,” adding, “In the economy, various indicators are showing that we are on a clear path to recovery.” Furthermore, at a cabinet meeting on the 13th, he emphasized economic recovery, saying, “Our economy is moving toward the light after escaping the dark tunnel of COVID-19 after much hardship,” and, “It is clear that a warm breeze of economic recovery is blowing, with the economy expected to return to pre-COVID levels within the first half of the year.”
However, for the self-employed, who feel the immediate impact of the economy, there is no sign of the end of the tunnel; they are instead burdened by mountains of debt or forced to close their shops. According to the Bank of Korea, the increase in bank loans for the self-employed reached an all-time high of 47.5 trillion won last year. This is nearly double the 24.7 trillion won increase seen in 2019.
The annual increase in loans for the self-employed had hovered around the 20 trillion won range since 2015, but it surged last year as self-employed individuals were hit hard by the fallout of strengthened quarantine measures, such as social distancing, due to COVID-19. Despite President Moon's remarks about economic recovery, the increase in loans for the self-employed is growing even faster this year. From January to February of this year, the increase in loans for the self-employed was 6.6 trillion won, roughly double the figure from the same period last year (3.8 trillion won).
Such debt among the self-employed is rising more rapidly under the Moon Jae-in administration, which prioritized the self-employed and small business owners, than under the Park Geun-hye administration, which focused on policies centered on large corporations. The total amount of loans for the self-employed rose by 94.3 trillion won, from 173.8 trillion won at the end of January 2013, before the Park Geun-hye administration took office, to 268.1 trillion won at the end of her term in April 2017. Under the Moon Jae-in administration, which still has one year left in office, the total amount of loans for the self-employed reached 392.6 trillion won as of the end of February this year, an increase of 124.5 trillion won in just 3 years and 10 months.
While some self-employed individuals are using bank loans to endure the COVID-19 situation, a significant number are shutting down due to deteriorating profits. According to Statistics Korea, the number of self-employed people, which stood at 5,695,000 in April 2017 before the Moon Jae-in administration took office, has fallen by 239,000 to 5,456,000 as of March this year.
In particular, many self-employed individuals decided to close their businesses because they could not pay their employees' salaries due to COVID-19. In the case of self-employed individuals with employees, the number dropped by 284,000, from 1,588,000 in April 2017 to 1,304,000 this past March. Conversely, the number of micro-entrepreneurs without employees increased by 45,000, from 4,107,000 to 4,152,000 during the same period. The rise in micro-entrepreneurs is interpreted as a result of people being pushed out of their workplaces or failing to find jobs due to COVID-19, leading them to start their own businesses despite the difficult economic situation.
In reality, the number of workers who found jobs under the Moon Jae-in administration has only increased slightly. The number of wage workers, which was 19,903,000 in April 2017 before the Moon Jae-in administration took office, grew by 608,000 to 20,511,000 in March this year. Compared to the 2,504,000 increase in wage workers from 17,399,000 in January 2012 to 19,903,000 at the end of the Park Geun-hye administration's term, the current level of growth is only a quarter of that seen previously.
Furthermore, daily laborers, a vulnerable social group, could not avoid the impact of the economic downturn under the Moon Jae-in administration. The number of daily laborers decreased by 290,000 in the 3 years and 11 months since the Moon administration took office, falling from 1,542,000 in April 2017 to 1,252,000 this past March.
An official from the business sector said, "If the acquisition of COVID-19 vaccines is delayed, the damage to the self-employed will only increase further," adding, "As it is difficult for the self-employed to survive on COVID-19 relief funds alone, there is a need to speed up the acquisition of COVID-19 vaccines."