A gloomy but often neglected aspect of the country’s job market is the large proportion of self-employed individuals struggling with excessive competition and income stagnation amid the prolonged economic downturn.
Self-employed people account for nearly a quarter of the total employed population in Korea, far higher than the average 16 percent for the 34-nation Organization for Economic Cooperation and Development. The figure stands at 12 percent in Japan and 7 percent in the U.S.
The number of self-employed people has decreased in recent years but is unlikely to shrink further as few decent jobs are being added to the labor market and there is a glut of young, overeducated job-seekers.
A particular cause for concern is that most mom-and-pop business owners are reeling under growing debt as their income has stagnated or declined for years in the face of intensifying competition and the ever-increasing market share of Internet businesses and major retail chains.
According to government figures, the average income of self-employed householders has remained at about 3 million won ($2,880) per month over the past decade ― a decline, if inflation is taken into consideration. The comparable figure for salaried workers, which was far lower 10 years ago, has risen above 4 million won over the cited period.
Self-employed householders are saddled with an average debt of 120 million won, about three times that of salaried employees. Baby boomers, those born between 1954 and 1963, are undergoing particularly severe hardships ― they accounted for half of the business failures last year.
Under these circumstances, the self-employed can hardly manage to prepare for their old age. Only 30 percent of them are estimated to be paying national insurance contributions.
A survey showed most self-employed people started their business after quitting a job because they had no other options for making a living. If their shops or restaurants fail, they fall into poverty. They should be given a chance to take retraining courses to find new work rather than having to start a business they have no experience in on their own.
Keeping baby-boomer employees who have reached the retirement age in the workplace is necessary for coping with a looming shrinkage of the country’s workforce.
The government and ruling party officials have been considering obligating companies with more than 300 employees to introduce programs to help their workers land jobs after retirement. This would be a necessary step. But easing or solving the hardships faced by self-employed individuals requires other effective measures: creating more jobs, implementing more systematic retraining programs and tightening the social safety net.
