Self-Employed Welcome Loss Compensation System for Now... Discrepancies Over Retroactive Application and Payment Timing

"Compensation Ratios Should Be Generous,
Discriminating Subsidies Based on Past Sales
Will Spark Complaints Everywhere"

[Asia Economy Reporters Seungyoon Song, Jeongyun Lee, Junhyung Lee] Small business owners and self-employed individuals generally welcome the government's legislation on the loss compensation system, but opinions differ regarding retroactive application, payment timing, and payment criteria.

On the 26th, Seongwon Lee, Secretary General of the Korea Federation of Small Business Owners and Self-Employed, said regarding the discussion on the legislation of the loss compensation system, "Our demand is for loss compensation so that self-employed people can cooperate with quarantine measures to the fullest extent." He added, "Although the criteria proposed vary by affected industry, we must establish a principle that the loss compensation ratio should be as substantial as possible." Lee expressed concern, saying, "While there is general agreement that sufficient compensation for losses should be provided, if a situation arises like with disaster relief funds where some receive support based on sales criteria and others do not, complaints will erupt everywhere."

Several self-employed organizations, including the National Cafe Owners Association and the Pilates Fitness Business Federation, have filed lawsuits against the government claiming damages due to the assembly ban orders. They are considering suspending or withdrawing the lawsuits if reasonable compensation is provided. Gyeonggiseok, President of the Korea Coin Karaoke Practice Room Association, said, "For industries that were unable to operate for a long time due to assembly bans, it is appropriate to provide 100% compensation based on last year's sales. Considering the financial situation and fairness with other industries, if at least 80% compensation is provided, continuing the lawsuits would be meaningless."

Park Joohyeong, representative of the Pilates Fitness Business Federation, explained, "Since the government prohibited business operations, fixed costs such as rent and management fees should be the basis, and for industries under assembly bans, loss compensation should be calculated based on sales. Although 100% loss compensation is difficult, until satisfactory compensation is actually paid, we plan to continue demanding damages and related lawsuits." Go Jangsu, president of the National Cafe Owners Association, stated, "Loss compensation is an important issue, but we also need to consider how to respond if similar situations arise in the future. Especially for self-employed individuals who opened new stores last year, there are ambiguous cases in estimating the damage scale. It would be good to carefully examine these cases and prepare more detailed compensation plans."

Guesthouse owners, whose businesses themselves have collapsed, are even more desperate. According to the Korea Tourism Organization and others, last year, 342 guesthouses nationwide excluding Jeju closed, and 40 chose to suspend operations. As of December last year, there were 2,594 registered guesthouses nationwide, meaning about 15% ceased operations.

However, neither the government nor related organizations have statistics to grasp the actual situation of guesthouses. A guesthouse in Jung-gu, Seoul, switched to a monthly rent system (paying rent in advance monthly) from May last year. The owner, Jeong (37), said, "I am managing rent while working part-time. Many try to hold on to receive key money. The accumulated losses in the lodging industry must be enormous. While we welcome the discussions, we are not holding high expectations." Some voices are also calling for consideration of those who have suffered economic damage in other forms, such as salary cuts or job losses.