Workers dismantle a closed barbecue restaurant in Seoul, Monday. Yonhap

The number of self-employed workers in Korea dropped to levels seen during the COVID-19 pandemic, as more mom-and-pop stores are shuttered amid a deepening economic downturn, data showed Monday.

According to Statistics Korea, the number of self-employed stood at 5.5 million in January, falling back to the levels at the height of the pandemic in 2021 when the number averaged 5.51 million per month.

The 5.5 million is also lower than during the Asian financial crisis in 1997 at 5.9 million and the global financial crisis in 2009 at 5.74 million.

Until the COVID-19 pandemic, the number had remained stable between 5.6 million and 5.7 million, but the crisis pushed it down.

The latest decline in self-employment stems from the prolonged economic downturn, while rising inflation and interest rates significantly worsened conditions for the self-employed.

In addition, consumers have been more accustomed to cutting back on spending since the COVID-19 pandemic. President Yoon Suk Yeol's Dec. 3 martial law declaration further exacerbated year-end consumer sentiment.

In 2024, retail sales fell 2.1 percent from the previous year, the steepest decline in 21 years. While the Consumer Sentiment Index for January recorded 91.2, up 3 points from the previous month, it still remained below the baseline of 100.

Lee Jung-hee, an economics professor at Chung-Ang University, said small business owners who had been hoping for a postpandemic recovery could no longer sustain their operations. "With many still struggling to stay afloat, the number of self-employed individuals is likely to continue declining this year," Lee said.

It's hard to expect Korea's domestic demand to recover anytime soon, according to the professor. The Korea Development Institute recently lowered its private consumption growth forecast for 2025 from 1.8 percent to 1.6 percent.

A recent survey conducted by the Federation of Korean Industries (FKI) found that 72 percent of 500 self-employed people said their net profits had decreased in 2024. More than 61 percent of respondents also expected a decline in sales this year, while 43.6 percent are considering closing their businesses within the next three years.

"The low-growth structure of our economy is weakening household consumption fundamentals and slowing domestic demand, deepening the struggles of countless self-employed individuals," said Lee Sang-ho, head of the economic and industrial research department at the FKI.

"To alleviate the burden on small business owners, it is essential to enhance financial support, stabilize raw material prices and implement measures to stimulate consumption."