Traditional Markets Welcome first Weekend after consumer coupons rolled out. (Image courtesy of Yonhap)
SEJONG, Dec. 29 (Korea Bizwire) — South Korea’s self-employed sector is showing tentative signs of recovery, buoyed in part by government-issued consumption coupons and an improving growth backdrop, though economists caution that structural pressures could limit the durability of the rebound.
According to data released Monday by the National Tax Service, the number of businesses that closed in October fell to 50,214, down more than 16,000 from June, when monthly figures were first published this year. After declining steadily through August, closures briefly ticked up in September before resuming their downward trend in October.
At the same time, the number of active businesses—those with confirmed sales activity—rose for a fourth consecutive month, reaching 10.37 million in October, up from 10.28 million in June. Employment indicators have also improved modestly: self-employed workers with paid employees totaled 1.49 million last month, an increase of 75,000 from a year earlier and the third straight monthly gain.
The picture is more mixed among smaller operators. While the overall number of self-employed without employees fell for a seventh straight month, declines were driven largely by structural contraction in agriculture and fisheries. In contrast, solo operators in retail, wholesale, accommodation and food services—sectors closely tied to domestic demand—have been increasing since midyear.
A notice about livelihood recovery consumption coupons posted at a shop in Mangwon Market, Mapo District, Seoul (Yonhap)
Economists attribute the improvement partly to a rebound in economic growth, which accelerated from a contraction in the first quarter to 1.3 percent in the third quarter, the strongest pace in nearly four years.
Short-term support also came from two rounds of government consumption coupons distributed in July and September. The Korea Development Institute estimated that sales in eligible sectors rose nearly 5 percent in the six weeks following the July payout.
Still, questions remain about sustainability. Household data show that while real incomes rose in the third quarter, real consumption fell, and the propensity to spend declined. Consumer sentiment has also softened: the Bank of Korea reported a sharp drop in its December confidence index, the steepest monthly fall in a year.
Financial stress among small proprietors poses a longer-term risk. Outstanding loans held by low-income self-employed workers have climbed to a record high, with delinquency rates at their highest level in nearly 12 years.
“The coupons provided a temporary lift for some businesses,” said Yang Jun-seok, an economics professor at Catholic University of Korea. “But it remains uncertain whether sales momentum can be sustained once policy support fades. The decline in closures may reflect endurance rather than a genuine structural recovery.”
As policymakers weigh next steps, the recent data suggest a fragile stabilization—one that could falter without broader improvements in domestic demand and financial conditions.
Ashley Song (ashley@koreabizwire.com)
