200,000 closures in two months: Concerning drop in self-employed business owners
Last year, the proportion of self-employed business owners among all employed individuals fell to 19.8 percent, marking the first time below 20 percent since statistical records began. The rate in January also hit a record low for that month at 19.7 percent.
Self-employed businesses have long been the weak link in South Korea’s economy, primarily due to their excessive numbers. Korea ranks eighth among Organization for Economic Co-operation and Development (OECD) countries in terms of self-employment rate, significantly higher than major economies, where the figure generally remains below 10 percent. Moreover, competitiveness remains an issue. According to the National Tax Service, a staggering 75.7 percent of sole proprietors earn less than 1 million won ($750) per month. Many rush into self-employment due to a lack of quality jobs and a weak social safety net, often without sufficient preparation. Consequently, a large portion of these businesses struggle to stay afloat, relying on debt to survive. The total debt held by self-employed individuals — including business and household loans — is estimated to be around 1,070 trillion won.
![Shops in Myungdong, the central area of Seoul where many tourists visit. Not many of these self-imployed business tend to survive in the the long run. [JOONGANG ILBO]](https://koreajoongangdaily.joins.com/data/photo/2025/03/11/5a548850-5432-41ac-a3a1-c7f86797b085.jpg)
Given these circumstances, discussions on the need for restructuring in the self-employed sector have been ongoing, and a decline in self-employment numbers might not necessarily be seen as a solely negative trend. Structural economic growth and industrial shifts can naturally reduce the proportion of self-employed businesses. However, the current decline is concerning as it appears to be driven primarily by economic downturn and sluggish domestic demand.
The numbers are alarming. Over the past two months alone, 200,000 self-employed individuals have shuttered their businesses. The number of self-employed business owners stood at 5.7 million in November last year but dropped to 5.5 million by January this year amid national turmoil, including the martial law declaration and impeachment proceedings. This is even lower than the 5.9 million recorded during the 1997 financial crisis. Additionally, the number of who used to be self-employed and presently receiving unemployment benefits surged by 2.3 times last year compared to four years ago. With soaring prices, high interest rates, and waning consumer sentiment, self-employed businesses are being pushed to the brink.
There is little hope for improvement in the current landscape. Economic downturn warnings are intensifying. The Korea Development Institute (KDI) stated in its March economic trend report that "economic downside risks are increasing due to the construction sector’s slump and worsening export conditions." This marks the third consecutive month of such warnings since January. Adding to the crisis, an impending trade war triggered by Trump’s tariff policies is expected to further exacerbate economic challenges, making survival even harder for self-employed businesses.
Self-employed individuals and their employees collectively exceed 10 million people. If they collapse, the broader economy will inevitably suffer. To prevent the fallout from spreading across the economy, the government must implement policies supporting business closures, retraining programs, and long-term job assistance measures. Industrial restructuring efforts, regulatory reforms, and institutional improvements are also necessary to create quality jobs. While full-scale fiscal expansion may not be feasible, efforts should at least be made to accelerate a supplementary budget to boost domestic consumption. Political infighting over martial law and impeachment must not take precedence over addressing this crisis. Lawmakers must ensure that their rallying cry of “self-employed businesses must survive for the economy to thrive” does not remain empty rhetoric.
Translated using generative AI and edited by Korea JoongAng Daily staff.
Self-employed businesses have long been the weak link in South Korea’s economy, primarily due to their excessive numbers. Korea ranks eighth among Organization for Economic Co-operation and Development (OECD) countries in terms of self-employment rate, significantly higher than major economies, where the figure generally remains below 10 percent. Moreover, competitiveness remains an issue. According to the National Tax Service, a staggering 75.7 percent of sole proprietors earn less than 1 million won ($750) per month. Many rush into self-employment due to a lack of quality jobs and a weak social safety net, often without sufficient preparation. Consequently, a large portion of these businesses struggle to stay afloat, relying on debt to survive. The total debt held by self-employed individuals — including business and household loans — is estimated to be around 1,070 trillion won.
Shops in Myungdong, the central area of Seoul where many tourists visit. Not many of these self-imployed business tend to survive in the the long run. [JOONGANG ILBO]
Given these circumstances, discussions on the need for restructuring in the self-employed sector have been ongoing, and a decline in self-employment numbers might not necessarily be seen as a solely negative trend. Structural economic growth and industrial shifts can naturally reduce the proportion of self-employed businesses. However, the current decline is concerning as it appears to be driven primarily by economic downturn and sluggish domestic demand.
The numbers are alarming. Over the past two months alone, 200,000 self-employed individuals have shuttered their businesses. The number of self-employed business owners stood at 5.7 million in November last year but dropped to 5.5 million by January this year amid national turmoil, including the martial law declaration and impeachment proceedings. This is even lower than the 5.9 million recorded during the 1997 financial crisis. Additionally, the number of who used to be self-employed and presently receiving unemployment benefits surged by 2.3 times last year compared to four years ago. With soaring prices, high interest rates, and waning consumer sentiment, self-employed businesses are being pushed to the brink.
There is little hope for improvement in the current landscape. Economic downturn warnings are intensifying. The Korea Development Institute (KDI) stated in its March economic trend report that "economic downside risks are increasing due to the construction sector’s slump and worsening export conditions." This marks the third consecutive month of such warnings since January. Adding to the crisis, an impending trade war triggered by Trump’s tariff policies is expected to further exacerbate economic challenges, making survival even harder for self-employed businesses.
Self-employed individuals and their employees collectively exceed 10 million people. If they collapse, the broader economy will inevitably suffer. To prevent the fallout from spreading across the economy, the government must implement policies supporting business closures, retraining programs, and long-term job assistance measures. Industrial restructuring efforts, regulatory reforms, and institutional improvements are also necessary to create quality jobs. While full-scale fiscal expansion may not be feasible, efforts should at least be made to accelerate a supplementary budget to boost domestic consumption. Political infighting over martial law and impeachment must not take precedence over addressing this crisis. Lawmakers must ensure that their rallying cry of “self-employed businesses must survive for the economy to thrive” does not remain empty rhetoric.
Translated using generative AI and edited by Korea JoongAng Daily staff.
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