By Yoon Ja-young
Staff Reporter
A growing number of working-class people are falling into poverty as the country struggles with an economic quagmire.
According to statistics, the number of those receiving basic social security benefits grew by 12,000 from a year ago to 1.45 million as of the end of July this year. The number of those who submitted petitions for bankruptcy at the Supreme Court totaled 71,654 during the first seven months of the year.
The self-employed who run small businesses such as cafeterias or shops are the ones suffering most, and an increasing number of the self-employed are expected to fall into poverty amid stagflation.
When laid off from work, many people become self-employed as it is difficult to find a job in the same field, especially if he or she is without a specialty or old _ the labor market is not as flexible as in other countries. Consequently, the ratio of self-employed is around two times higher in Korea compared with other developed countries. Around 500,000 are known to start small business each year, but few people succeed.
A 57-year-old self-employed Roh is a typical example. After being laid off from a fur trading company, Roh started a health food shop on loans. The business, however, didn't succeed due to stiff competition and lack of experience. After his wife fell sick, Roh couldn't shoulder the mounting debt. He had to sell a small apartment in Seoul and move out of the capital to find a cheap house to rent.
According to the Korea Restaurant Association, the number of restaurants and cafeterias that closed down, either temporarily or for good, totaled near 130,000 in the first half of the year. The number of self-employed has fallen for three years in row, dropping to below 6 million recently, the lowest level since 2003 when the credit card bubble collapsed.
The fall has to do with the slowdown of the economy ― people are cutting spending as their real income dwindles amid inflation. According to the National Statistical Office, real household monthly income reflecting inflation totaled 3 million won in the second quarter, shrinking 4.8 percent from the first quarter. Consumer prices rose nearly 6 percent in July, the highest level in nearly a decade. The weakening Korean won is adding to the inflation pressure as the country heavily depends on imports for daily necessities.
Other statistics showed that one out of three households were running a deficit, especially among poor households. Among the bottom 30 percent of the income bracket, nearly half of households were in deficit.