| Whether you consider closing your business within 3 years (left), survey results for sales and net profit this year compared to last year |
FKI, self-employed survey results
Sales decreased by 68.6% compared to last year
It was found that 4 out of 10 self-employed business owners are considering closing their business within the next three years amid deteriorating business performance or uncertain economic prospects. As for the economic recovery period, more than half of the respondents predicted the next year, 2024 or later.
The Federation of Korean Industries (FKI) conducted a survey on 2022 performance and 2023 prospects for self-employed people on the 12th, commissioned by Mono Research, a market research institution, on 500 self-employed people in restaurants, accommodations, wholesale/retail, and other service industries. Disclosed.
In the survey, 39.8% of self-employed people said they were considering closing their business within the next three years. 12.0% answered that they might close their business within 1 year to 1 year and 6 months. Business closure within 2~3 years (10.6%) followed, followed by business closure within 6 months~ 1 year (8.0%), business closure within 1 year and 6 months~ 2 years (4.8%), and business closure within 6 months (4.4%). appeared as Reasons for considering closure include continued deterioration in business performance (26.4%), uncertain prospects for economic recovery (16.1%), worsening financial situation and burden of loan repayment (15.1%).
68.6% of the self-employed saw their sales decrease this year compared to last year. Although social distancing has been lifted, the self-employed business is not reviving. The response that net profit decreased was 69.6%, reaching 7 out of 10 respondents. The average decrease compared to last year was 12.5% in sales and 12.4% in net profit.
The outlook for next year is also not good. 53.2% of respondents expected a decrease in sales and 54% expected a decrease in net profit. Next year’s sales and net profit are expected to decrease by 3.1% and 3.8%, respectively, compared to this year. The cost increase factors that have the greatest impact on business performance are △raw materials and material cost (22.8%) △labor cost (21.5%) △rental fee (20.0%) △principal and interest on loan repayment (14.0%).
The financial situation worsened as the burden of repayment of loans increased due to the increase in interest rates. The average interest rate for the self-employed is currently 5.9%, up regarding 2 percentage points from last year. The average loan amount is regarding 99.7 million won. 15.8% of respondents said their loans were over 150 million won.
Many self-employed people predicted that the recent economic downturn would continue into next year. When asked when the economy would recover, 59.2% of respondents answered that it would be following 2024, the next year. The self-employed said they needed government support policies such as expanding financial support such as low-interest loans (20.9%), supporting consumption promotion to recover consumer sentiment (17.8%), and suppressing public utility bill hikes such as electricity and gas (13.3%).
Yoo Hwan-ik, head of the industry headquarters of the FKI, said, “The proportion of self-employed people in Korea is regarding 25%, which is the highest level among OECD countries.
Reporter Cho Seong-jin
