35% of Small and Medium Enterprises Plan to Reduce Employee Numbers in the Second Half of This Year

On the 26th, various places on the streets of Myeongdong, Seoul, displayed notices of temporary closure related to the novel coronavirus disease (COVID-19), creating a quiet atmosphere. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Hyewon] As the COVID-19 pandemic prolongs, it has been found that 4 out of 10 small and medium-sized enterprises (SMEs) plan to reduce the number of employees in the second half of this year compared to the first half.

The Small and Medium Business Institute announced in its report titled "Employment Outlook and Policy Tasks for SMEs Amid the Spread of COVID-19," released on the 31st, that "35.3% of SMEs responded that they plan to reduce the number of employees in the second half of this year compared to the first half," adding that "this is more than twice the percentage of those who responded that they plan to increase employees (17.1%)." It was also found that 44% of all surveyed companies had already reduced their workforce compared to the end of last year.

During the same period, 20.3% responded that the decrease in the number of employees would be "2 or more," while 15.0% said "1 employee will be reduced."

While 60.5% of SMEs answered that "new hires are necessary in the second half," 33.6% said, "New hires are necessary, but there is no intention to recruit." This is interpreted as a situation where many SMEs are struggling with labor shortages but are unable to consider additional hiring.

Researcher Noh Minseon of the Small and Medium Business Institute said, "SMEs that need to hire new employees are the actual policy targets when promoting SME job support projects in the future," and added, "It is necessary to pay policy attention so that hiring demand in SMEs can actually lead to recruitment."

Meanwhile, this survey was conducted from the 18th to the 22nd of last month, targeting 800 SMEs with 5 or more employees.