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Collapse of micro-enterprises shakes the foundation of Korea Inc.
The ongoing new coronavirus outbreak is inflicting considerable damage on the self-employed and small businesses. According to a survey conducted by the Korea Federation of Micro Enterprise (KFME) on 1,096 members early this month, 97.9 percent of respondents said their sales have declined since the start of the epidemic. No fewer than 44 percent said their turnover had more than halved, the KFME said. Asked about changes in customer visits, 97.5 percent said the number of clients visiting their stores had also plummeted. The largest share of them, or 61.4 percent, cited the cancellation or indefinite postponement of scheduled events and travel as reasons for these.
All this shows how the adverse economic effects of he COVID-19 are spilling over to the self-employed. More than nine out of 10 are complaining about dismal sales records. The epidemic's damage has spread to all industries and businesses. Still, the effects on small enterprise owners need to be interpreted from a different perspective. Big businesses and large shopping malls with deep pockets can absorb temporary damage ― small businesses and the self-employed cannot. These micro-businesses have to rely on daily earnings to make ends meet, and most of them cannot keep their stores open if sales fall for a month or longer. If small vendors collapse, regional commercial spheres will also swiftly crumble.
The government should come up with immediate countermeasures. First of all, it should work out various steps to boost consumption. That will not be easy as the new coronavirus has frozen consumer sentiment. For now, the administration does not have much option but to extend financial support. More than half of the respondents in the survey cited budget frontloading and the provision of "management-stabilizing funds" as the most urgent and practical support.
The Moon Jae-in administration has to seek realistic ways to help struggling small businesses, such as formulating an extra budget. If the grassroots of the economy breaks down, its impact will be felt across the board. In conclusion, the Moon government needs to present and implement steps to save small firms and the self-employed from the fallout of COVID-19.
