6 out of 10 SMEs in Daejeon, Sejong, and Chungnam Say "Difficult to Pay Chuseok Bonuses"

Social distancing measures, which were strengthened due to the resurgence of COVID-19, will be downgraded to Level 2. However, since the Chuseok holiday period is expected to be a critical factor, quarantine measures will be reinforced to respond to the potential spread. On the 13th, Prime Minister Chung Sye-kyun stated at the Central Disaster and Safety Countermeasure Headquarters meeting held at the Government Seoul Office, "Considering social fatigue and the effectiveness of the quarantine measures confirmed so far, we plan to adjust social distancing in the metropolitan area to Level 2 for the next two weeks." The photo shows citizens wearing masks and taking a walk at Seokchon Lake in Songpa-gu, Seoul, on the same day. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Moon Hyewon] Six out of ten small and medium-sized enterprises (SMEs) in the Daejeon, Sejong, and Chungnam regions are either unable to pay or are considering whether to pay Chuseok holiday bonuses this year.

According to a survey conducted on the 20th by the Korea Federation of SMEs Daejeon, Sejong, and Chungnam Regional Headquarters targeting 71 local SMEs, only 42.3% of the companies responded that they have plans to pay Chuseok bonuses.

Companies that will not pay bonuses accounted for 36.7%, and those undecided accounted for 21%.

The number of companies reporting financial difficulties was 64.8%, an increase of 2.1 percentage points from 62.7% last year.

This is the highest figure in the past five years since 2016.

The biggest cause was poor sales (84.8%), and notably, all 71 companies agreed that the novel coronavirus disease (COVID-19) has affected their financial difficulties during Chuseok.

When asked about the scale of funds needed for the holiday, the average response was 108.4 million KRW.

The average shortage of funds was 63.6 million KRW, with a shortage rate of 58.7% compared to the required funds.

As for plans to secure funds, the responses were 'no measures' (53.5%), 'payment deferral' (34.9%), and 'early collection of delivery payments' (27.9%) in that order.

'No measures' increased by 24.1 percentage points compared to last year, indicating the need for expanded financial institution support for SME financing, according to the Korea Federation of SMEs regional headquarters.

Jeon Wonsik, Chairman of the Korea Federation of SMEs Daejeon, Sejong, and Chungnam SME Council, stated, "Due to COVID-19-related poor sales leading to domestic demand recession, increased external uncertainties, sluggish investment and exports, the downside risks to the economy are expanding, worsening the financial conditions of SMEs. Furthermore, ahead of Chuseok, it is necessary for financial authorities to provide special funds and implement thorough measures to ensure smooth supply of holiday funds."