An analysis of self-employed businesses during the COVID-19 pandemic

The management conditions at face-to-face service businesses in Korea has deteriorated amid the protracted COVID-19 pandemic, and accordingly, the survivability of self-employed businesses, which account for a large proportion of the face-to-face service sector, has been negatively affected. Revenues started rising in this sector between February and April of this year, but most businesses have yet to recover to pre-COVID-19 levels. The worsening of such businesses has varied across categories. While some have recovered to the levels seen in 2019 before the pandemic hit, or to the 80 to 90 percent range, others are seeing revenues continue to fall. The travel sector has seen particularly serious damage, with sales this year reaching just ten percent of 2019 figures. With the government’s transition to a “living with COVID-19” policy in November 2021, the loosening of disease prevention measures is expected to improve conditions at owner-operated businesses. The impact of the worldwide COVID-19 pandemic, however, has differed substantially by business category, and in some sectors, both the pandemic and changes in consumption patterns toward contact-free products and services suggests the path to recovery will be difficult regardless. The plight of owner-operated businesses means a short-term recovery prove challenging even with the government having provided loans and other types of relief and forthcoming financial aid to compensate for losses. This paper assesses the state of owner-operated businesses by category and sector and proposes a set of policies aimed to support a recovery in this segment of domestic economy.