Korea's small businesses face hardship despite government's support measures
- 6 years ago
Small business owners in South Korea have been crying out for government help to see them through a crisis triggered by the minimum wage hike.
Heeding their call,... officials are due to unveil a set of measures on Wednesday which may include slashing credit card commission fees and expanding tax benefits for small business owners.
Our Hong Yoo went to meet with some of those expected to benefit from the upcoming changes.
Rows and rows of empty seats.
Silence takes over the entire establishment, and only the sound of the owner cleaning is heard.
The owner of this PC cafe, who used to have staff to take care of the business 24/7, is now working alone, from 6am to 6pm.
The cafe is no longer open 24 hours as it used to be, because the owner cannot afford to pay his employees' wages, especially when the payroll needs to reflect on the minimum wage increases mandated by the government for this year and next year... which means increases of 16-point-4-percent and 10-point-9-percent respectively.
"The decision to increase the minimum wage was just like telling us, "You now must pay them this much. No questions allowed." So for us, it's hard to keep our business going when the expenditure to maintain our business running keeps increasing."
It's a similar story for this restaurant.
Only one table is occupied by customers and the rest remain empty during lunch hour when it should normally be the busiest time of the day.
In response, the National Tax Service unveiled a set of measures last week including the postponing or scrapping of tax audits for small business owners until the end of 2019.
But it may come short when making a difference in helping the self-employed... estimated to make up 21 percent of Korea's working population.
"It is hard to understand why they came up with such measures because these days everyone uses credit cards to pay. So our income is already being accessible, and exempting us from tax investigation is not helpful at all."
A local expert say such measures fall short in terms of providing a primary solution... and called for mid-to-long term measures tailored to the needs of different regions and sectors... as well as policies that could lessen the burden of small business owners piling on debt.
"One of those ways could include expanding financial support for small businesses so that they could readily secure finances when they apply for small private loans."
A report by the Korea Institute of Finance released earlier this week showed the country's self-employed are three times more likely to be suffering from heavy debts as opposed to salaried workers.
Hong Yoo, Arirang News.
Heeding their call,... officials are due to unveil a set of measures on Wednesday which may include slashing credit card commission fees and expanding tax benefits for small business owners.
Our Hong Yoo went to meet with some of those expected to benefit from the upcoming changes.
Rows and rows of empty seats.
Silence takes over the entire establishment, and only the sound of the owner cleaning is heard.
The owner of this PC cafe, who used to have staff to take care of the business 24/7, is now working alone, from 6am to 6pm.
The cafe is no longer open 24 hours as it used to be, because the owner cannot afford to pay his employees' wages, especially when the payroll needs to reflect on the minimum wage increases mandated by the government for this year and next year... which means increases of 16-point-4-percent and 10-point-9-percent respectively.
"The decision to increase the minimum wage was just like telling us, "You now must pay them this much. No questions allowed." So for us, it's hard to keep our business going when the expenditure to maintain our business running keeps increasing."
It's a similar story for this restaurant.
Only one table is occupied by customers and the rest remain empty during lunch hour when it should normally be the busiest time of the day.
In response, the National Tax Service unveiled a set of measures last week including the postponing or scrapping of tax audits for small business owners until the end of 2019.
But it may come short when making a difference in helping the self-employed... estimated to make up 21 percent of Korea's working population.
"It is hard to understand why they came up with such measures because these days everyone uses credit cards to pay. So our income is already being accessible, and exempting us from tax investigation is not helpful at all."
A local expert say such measures fall short in terms of providing a primary solution... and called for mid-to-long term measures tailored to the needs of different regions and sectors... as well as policies that could lessen the burden of small business owners piling on debt.
"One of those ways could include expanding financial support for small businesses so that they could readily secure finances when they apply for small private loans."
A report by the Korea Institute of Finance released earlier this week showed the country's self-employed are three times more likely to be suffering from heavy debts as opposed to salaried workers.
Hong Yoo, Arirang News.