Small business owners are increasingly burdened by rising labor costs. (Image courtesy of Yonhap)
SEOUL, Feb. 27 (Korea Bizwire) — As South Korea’s prolonged economic downturn continues, small business owners are increasingly burdened by rising labor costs.
A recent analysis shows that small independent business operators employ an average of 1.8 workers per establishment, highlighting the strain on entrepreneurs trying to sustain their workforce.
According to data from the tax filing app SSEM, released on February 26, businesses using its payroll reporting service employed an average of 1.8 workers per location as of last month.
The most common workforce size was a single employee, accounting for 60.6% of businesses, followed by two employees (18.7%), three employees (9.3%), five or more employees (7.0%), and four employees (4.4%).
Rising Labor Costs Weigh on Small Businesses
The average monthly labor cost per business was reported at 2.64 million won ($1,842). The largest segment of businesses (29.1%) spent less than 1 million won ($698) on wages, while 25.6% spent between 1 million and 2 million won.
Other distribution figures included 19.5% spending between 2 million and 3 million won, 8.7% spending between 3 million and 4 million won, and 4.9% allocating between 4 million and 5 million won. Only 3.4% of businesses reported spending more than 10 million won per month on labor.
Growing Adoption of Digital Payroll Services
SSEM launched its payroll reporting service in September 2022, and as of last month, the cumulative reported payroll through the platform has exceeded 51.2 billion won ($35.7 million).
More than 3,000 businesses have used the service, with a repurchase rate of 78%, indicating high satisfaction among small business owners looking for efficient payroll management solutions.
SSEM CEO Cheon Jin-hyuk stated, “We will continue to enhance our services so that independent business owners can focus on their businesses without the hassle of tax reporting at a reasonable cost.”
With labor expenses rising and economic challenges persisting into 2025, small businesses remain under pressure, making cost-effective payroll solutions increasingly vital for sustainability.
M. H. Lee (mhlee@koreabizwire.com)
