Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
1 in 3 self-employed business owners earns less than minimum wage: FKI
A notice on a store advertises a closing sale in a commercial neighborhood in Seoul, June 16, amid the prolonged economic downturn. Yonhap
By Yi Whan-woo
Prolonged economic downturn pushes small biz owners deeper into financial hardship
One in three self-employed individuals earns less than the government-set minimum wage on a monthly basis, a survey showed Thursday, highlighting the financial hardship of those running small businesses amid soaring labor costs and stagnant consumer spending.
The survey, carried out by the Federation of Korean Industries (FKI), also showed that nearly 60 percent of self-employed people want next year’s minimum wage frozen or lowered from this year’s 10,030 won ($7.40) per hour.
Such findings came as labor unions are demanding the 2026 minimum hourly pay for salaried workers be set at 11,500 won, a 14.7 percent hike from this year, in the ongoing three-way talks with management and the government.
The FKI survey was conducted through 500 self-employed business owners nationwide. It compared their income with this year’s minimum wage, which is equivalent to 2.09 million won per month based on a 40-hour workweek.
Some 30 percent of the respondents said their average monthly income was lower than 2.09 million won after deducting operational expenses, such as labor costs and rent, from revenue.
Around 18 percent responded that their average monthly income was higher than 2.09 million won but lower than 2.5 million won, while another 20.4 percent said they earned between 2.5 million won and 3 million won, and 11.2 percent between 3 million won and 3.5 million won.
“The finding is the latest in a series of data indicating a prolonged economic downturn is pushing some self-employed business owners deeper into severe financial hardship,” the FKI said.
More than 63 percent of respondents also indicated their business conditions had deteriorated compared to last year. Some 29 percent said conditions were about the same, and only 6.8 percent said they saw any improvement.
Asked about how much this year’s minimum wage weighs on their business, 50 percent of the respondents said it is “heavily burdensome.” Another 30.6 percent said it is “bearable,” and for 19.4 percent it is “no burden at all.”
Concerning next year’s minimum wage, 59.2 percent were against a possible hike, 44.2 percent wanted the wage to remain unchanged from this year and 15 percent called for a reduction.
Support for the idea of a minimum wage freeze was the highest among those in the accommodation and restaurant sectors at 59.3 percent, followed by 44.9 percent in the retail and wholesale sectors and 42.7 percent in the construction and real estate sectors.
The FKI assessed that a possible minimum wage hike “could further weaken the hiring capacity of the self-employed,” saying the financial strain is likely to be passed on through higher consumer prices.
Bank of Korea data showed Wednesday that the delinquency rate of low-income, debt-ridden self-employed individuals was 12.24 percent in the first quarter of 2025, the highest since the second quarter of 2013, when it was measured at 13.54 percent.
A 2024 Korea Enterprises Federation report showed that 986,000 self-employed business owners shut down their businesses in 2023, marking an all-time high since the relevant data was compiled beginning in 2006.