Germany to Compensate Self-Employed COVID-19 Victims Up to 600 Million Won [Is Your Dream Well?]

Looking into Overseas Support Cases

[Sejong=Asia Economy Reporter Kim Hyunjung] Amid the global spread of the novel coronavirus disease (COVID-19) crisis, South Korea is on the verge of becoming the "graveyard of self-employment." Due to the unusually high proportion of self-employed workers and a structure dependent on location and foreign tourists, there are concerns that limited government support alone will not be enough to rescue them.

According to Statistics Korea on the 12th, as of November last year, the number of self-employed workers in the country was 6,563,000, accounting for 24.1% of the total employed population (27,241,000). This means that one in four workers is engaged in self-employment. Self-employed individuals also account for a significant portion of overall productivity. According to the Bank of Korea, sectors with a high proportion of self-employment such as wholesale and retail trade, accommodation and food services, transportation, education, and other services accounted for 17.5% of the gross domestic product (GDP) in the third quarter of last year.

Internationally, South Korea’s self-employment rate is notably high. Among the 36 member countries of the Organisation for Economic Co-operation and Development (OECD), South Korea ranked 8th (24.6% as of 2019), following Colombia (50.1%), Brazil (32.6%), Mexico (31.9%), Greece (31.9%), Turkey (31.5%), Costa Rica (26.6%), and Chile (25.8%).

The South Korean government has not been idle either. To support the self-employed, customized disaster relief funds (third round) began disbursement on the 11th of this month. Businesses subject to gathering bans such as entertainment establishments, academies, and indoor sports facilities, as well as businesses with operational restrictions like restaurants, cafes, and beauty salons, can receive up to 3 million KRW and 2 million KRW respectively, while general businesses can receive up to 1 million KRW through the Small Business Support Fund.

However, the scale of this support is criticized as grossly insufficient compared to measures in some so-called "advanced countries" such as France, Germany, and the United Kingdom. The German Ministry of Finance compensates self-employed individuals affected by COVID-19 with up to 500,000 euros (approximately 670 million KRW) per person. During the first full lockdown, monthly payments of up to 15,000 euros were provided for three months, and during the second lockdown, cash payments covering up to 75% of the revenue loss (compared to the previous year) for two months were decided.

In the UK, since November last year, about 600,000 small businesses and food service establishments in lockdown areas have been supported with up to 3,000 pounds (approximately 4.45 million KRW) per month, and businesses in indirectly affected areas have received retroactive payments of up to 2,100 pounds. It is expected that 1 billion pounds per month will be required to support businesses in the third-level lockdown areas.

Japan also extended its COVID-19 state of emergency and decided to provide differentiated payments to reduce rent burdens: up to 6 million yen (approximately 63.65 million KRW) for corporations and up to 3 million yen for individual business owners. Canada supports self-employed individuals affected by revenue losses with 1,000 Canadian dollars (approximately 860,000 KRW) every two weeks (up to 26 weeks). The United States, through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, has stipulated that tenants cannot be evicted for rent arrears to alleviate rent burdens on small business owners.