8 out of 10 self-employed in Korea earn less than $750 a month

A lease sign is put up at a store in Seoul, Jan. 8. Newsis

The number of self-employed individuals earning less than 1 million won ($750) per month surpassed 9 million in 2023. This trend emerged during a period marked by high interest rates, inflation and oil prices — collectively referred to as the "three highs." The sluggish domestic economy, compounded by weak consumption and political turmoil involving a botched martial law and impeachment proceedings, has left little room for optimism regarding economic recovery.

According to data submitted by the National Tax Service to Rep. Chung Il-young of the main opposition Democratic Party of Korea, Sunday, the number of self-employed individuals earning under 1 million won per month in 2023 reached 9,220,185 — a 7.1 percent increase from the previous year. This figure represents 75.7 percent of all self-employed individuals, meaning that nearly 8 out of 10 self-employed workers earned less than the monthly-converted minimum wage of 2.01 million won.

In 2019, which was before the COVID-19 pandemic, the number of self-employed earning under 1 million won per month was 6,108,751. This figure has steadily increased, rising by over 50 percent in four years. Meanwhile, the number of individuals reporting annual income between 12 million and 60 million won in 2023 grew by only 100,000, reaching 2,502,667, but their proportion dropped from 21 percent to 20.5 percent. High-income earners, defined as those making over 60 million won annually, also decreased to 3.7 percent, down 0.2 percentage points from the previous year.

The outlook appears bleak for last year’s income to be reported in May this year. The retail sales index, which reflects goods sales, fell 2.1 percent year-on-year from January to November 2023 — the steepest decline since the credit card crisis in 2003. Additionally, consumer confidence remains frozen amid political instability, with the Consumer Composite Sentiment Index (CCSI) dropping 12.3 points month-on-month to 88.4 in December.

The Bank of Korea’s decision Jan. 16 to freeze the base interest rate is further straining self-employed workers and small business owners. Analysts argue that monetary policy alone is insufficient to address mounting challenges given high won-dollar rates and inflationary pressure, calling for expanded fiscal measures. Bank of Korea Governor Rhee Chang-yong recommended a supplementary budget of 15 to 20 trillion won, emphasizing targeted support for self-employed individuals rather than universal handouts.

Rep. Chung said, “The economic cold wave affecting livelihoods will intensify with sluggish domestic demand and heightened political uncertainty. A supplementary budget of 30 trillion won, including the issuance of regional gift certificates, is urgently needed to revitalize local economies.” He added, “The Bank of Korea’s Monetary Policy Committee should lower the base rate next month to avoid missing the opportunity to stimulate domestic consumption.”

This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI system and edited by The Korea Times.