Nearly 75% of individual business owners reported monthly incomes below 1 million won in 2022. (Image courtesy of Yonhap)
SEJONG, Sept. 23 (Korea Bizwire) – A stark revelation about the economic struggles of South Korea’s self-employed population has emerged from recent tax data, showing that nearly 75% of individual business owners reported monthly incomes below 1 million won in 2022.
The figures, released by the National Tax Service and analyzed by Representative Park Sung-hoon of the People Power Party, paint a troubling picture of the financial health of South Korea’s small business sector, a crucial component of the nation’s economy.
According to the data, out of 11.46 million income tax returns filed by individual business owners in 2022, a staggering 8.61 million (75.1%) reported monthly incomes below 1 million won. Even more concerning, nearly 944,000 filers (8.2%) reported zero income for the year.
While these figures may not fully capture unreported income, they nonetheless highlight a structural problem in South Korea’s economy, suggesting that a significant portion of the self-employed population is living near or below the poverty line.
The trend of low-income self-employment has been steadily worsening over recent years. The number of tax returns reporting annual incomes below 12 million won rose from 6.1 million in 2019 to 7.9 million in 2021, with a further increase to 8.6 million in 2022.
Experts attribute this trend to several factors, including the tendency for laid-off wage workers to turn to self-employment as a survival strategy, and the increasing pressure from large platform companies that charge high commissions and delivery fees.
“The fact that about 75% of self-employed individuals earn less than 1 million won a month reflects the dire economic conditions faced by small business owners,” Park said. He called for comprehensive measures to address the issue, including reforms to lower the barriers to entry that often lead unprepared individuals into business ventures doomed to fail.
The situation is expected to worsen as South Korea’s second wave of baby boomers (born 1965-1974) begins to retire, potentially flooding an already saturated market of small businesses amid a persistently weak domestic economy.
M. H. Lee (mhlee@koreabizwire.com)
