SEOUL, Sept. 28 (Korea Bizwire) – Less than one-third of small enterprises survive past five years, the toll heaviest on finance and insurance businesses, a report showed Wednesday.
According to the Small and Medium Business Administration which submitted the report to the parliamentary trade committee, only 29 percent of small-scale enterprises that opened in 2008 were still in business in 2013. Sixty percent of them stayed open for a year, but the rate fell to 47.3 percent for the second year, to 38.2 percent for the third year and to 32.2 percent for the fourth year, the report said.
Small businesses, 3.06 million of them in the country as of 2014, accounted for 86.4 percent of the total number of enterprises. Some 6.05 million people, or 37.9 percent of the workforce, were employed in the sector.
Among the people who started lodging or restaurant businesses, 55.6 percent were still there after a year. In the fifth year, the rate dropped to 17.7 percent.
Survival was the toughest for financial and insurance businesses, with only 45.7 percent of them still open after a year. The number fell to 13.9 percent in the fifth year. Conditions were no different for arts, sports and leisure businesses, whose survival rate was 54 percent for the first year, dropping to 14.3 percent in the fifth year.
The most promising sectors were electricity, gas and water-related operations. After five years, 71.4 percent were still in business.
“That a majority of small enterprises cannot be sustained for more than five years, especially in sectors tied closely to the livelihoods of the people starting businesses, shows how difficult the conditions are for the self-employed,” said Rep. Lee Che-ik, the lawmaker who had asked for the report.
“The government needs to look closely into the problems that they face and take measures to improve their survivability.”