80.0% of Small Business Owners Expect Business Conditions to Worsen After Q3 This Year

Korea Federation of SMEs
4th Supplementary Budget and Small Business Management Status Survey Results

Source=Korea Federation of SMEs

[Asia Economy Reporter Kim Daeseop] Eight out of ten small business owners expect their business conditions to worsen after the third quarter of this year. They also anticipated that the government's 4th supplementary budget (supplementary budget) would help recover damages suffered by small business owners.

According to the Korea Federation of SMEs on the 22nd, the '4th Supplementary Budget and Small Business Management Status Survey' showed that 80.0% responded that 'business conditions will worsen after the third quarter of this year.' This figure is 11.8 percentage points higher than the 68.2% who expected business conditions to worsen after the second quarter in the 'COVID-19 Related Small Business Policy Task Survey' conducted by the Federation in May this year.

Among small business owners who responded that business conditions would worsen, when asked about the timing of business condition improvement, 43.3% answered 'second half of 2021,' 25.5% 'after 2022,' and 18.0% 'no improvement possible.' This indicates that the expected recovery period has been delayed compared to the May survey results.

In this survey, 81.8% answered that the 4th supplementary budget would be 'helpful.' The reasons cited for expecting the 4th supplementary budget to be helpful included 'helping recover damages to small business owners' (53.8%) and 'inducing domestic demand activation by expanding consumption capacity' (46.2%).

Meanwhile, 18.2% responded that the supplementary budget would 'not be helpful.' The reasons for this included 'minimal practical effect compared to cost' (64.8%), 'narrow and unfair support targets' (25.3%), and 'concerns about government fiscal deterioration' (9.9%).

Source=Korea Federation of SMEs

Regarding the expected effects of the main contents of the 4th supplementary budget, respondents answered in order of 'small business management stabilization and recovery support' (3.71 points), 'emergency liquidity supply to SMEs' (3.68 points), 'emergency livelihood support for households in crisis' (3.61 points), and 'worker employment retention support and emergency employment stabilization support' (3.58 points). This was surveyed on a scale where 5 points mean very effective, 4 points somewhat effective, 3 points average, 2 points not very effective, and 1 point not effective at all.

Since the spread of COVID-19, the most effective government support measure for small business owners was 'emergency disaster relief funds,' chosen by 36.0%. This was followed by 'tax credit for rent reduction' (22.4%), 'expansion of income deduction rates for credit/debit cards' (12.8%), 'expansion of loan and guarantee support' (11.8%), and 'expansion of employment retention subsidies' (8.0%).

This survey was conducted from the 14th to the 18th among 500 small business owners in wholesale/retail, food service, lodging, and other service industries.

Joo Moon-gap, head of the Economic Policy Headquarters at the Korea Federation of SMEs, said, "As eight out of ten small business owners are concerned about worsening business conditions due to the resurgence of COVID-19, I hope the 4th supplementary budget can provide some relief to small business owners and micro SMEs who are struggling day by day." He added, "We request active attention from the National Assembly and government to ensure that necessary support is supplied in a timely manner to vulnerable groups who are suffering concentrated damage due to the COVID-19 resurgence."