[Loss Compensation] Small Business Owners and Self-Employed "Disappointed That 100% Loss Compensation Is Not Provided"

On the 8th, Oh Se-hee, president of the Korea Federation of Small and Medium Business, along with co-chairmen of the Self-Employed Emergency Committee, held a press conference in front of the tent protest site set up at Sejongno Park near the Government Seoul Office in Jongno-gu, Seoul, urging the relaxation of quarantine guidelines and compensation for losses. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporters Jonghwa Kim, Heeyoon Kim, Junhyung Lee] Although the government announced compensation for losses due to gathering bans and business hour restrictions to prevent the spread of COVID-19 since July 7, small business owners and self-employed individuals could not hide their disappointment.

According to the Ministry of SMEs and Startups on the 8th, the compensation amount is calculated by applying an 80% adjustment rate to the average daily loss amount in the same month of 2021 compared to 2019, a year unaffected by COVID-19, for institutions complying with quarantine measures.

Before implementing the loss compensation system, the government held inter-ministerial and private task force (TF) meetings and pre-workshops of the Loss Compensation Deliberation Committee to listen to experts and the voices of small business owners on the ground. In particular, last month, they held seven meetings with about 20 domestic small business organizations, and among the seven private members of the Loss Compensation Deliberation Committee who review the standards and procedures for compensation, one member each was recommended by the Korea Federation of Small and Medium Business and the National Federation of Merchants and appointed.

"Principle of 100% Compensation... Compensation Amount Must Be Reasonable"

Seongwon Lee, Secretary General of the Korea Federation of Small and Medium Business Owners and Self-Employed, stated, "The principle should be 100% compensation for losses caused by gathering bans and business restrictions, but since the compensation amount is set according to the budget, blind spots will occur," adding, "We need to set a compensation amount that everyone can accept, such as raising the adjustment rate or increasing the minimum compensation amount."

At the same time, Secretary General Lee said, "There is a sense of relief that compensation has started," and praised "especially the fact that no distinction was made between gathering bans and business restrictions," but added, "It is regrettable that 80% adjustment rate was applied instead of 100% compensation for losses."

Frontline self-employed individuals also expressed dissatisfaction that the compensation was too small. Minyoung Kim (pseudonym), who runs a study cafe in Bucheon, Gyeonggi Province, said, "Study cafes have peak seasons during exam periods and low seasons in winter. During the midterm exam period, the level 4 restrictions were concentrated, so there were almost no new payments," adding, "Even after deducting facility depreciation, fixed monthly costs are 7 to 8 million KRW. Even combining all the support funds received so far barely covers one month’s rent," she appealed.

"Disaster Relief Funds Were the Smallest... Only Closure Left"

The travel industry, which is excluded from the compensation because it does not fall under gathering bans or business restrictions, is in an even darker mood. Jaeho Ko (pseudonym), who operated a travel agency in Incheon but has been working as a delivery rider since February, said, "I cannot close the business due to loan repayment issues, and I am solving loan interest and rent problems through rider work," adding, "The losses from COVID-19 were the greatest, but travel and tourism cannot expect compensation. I am just surviving on loans."

Byungkwan Kwon, director of the Uri Travel Industry Cooperative, said, "It is deplorable that the travel industry, which suffered the most damage from COVID-19, was excluded from compensation because the losses were unrelated to administrative orders," adding, "Disaster relief funds were classified as general businesses and received the smallest support, so the travel industry on the brink is left with only closures without even loss compensation."

Seungpil Baek, full-time vice president of the Korea Travel Industry Association, said, "We have strongly requested government-related ministries to include the travel industry in the loss compensation target, but it was ultimately not reflected," adding, "In the With-Corona era, the government should provide maximum support to revitalize tourism, so it is very regrettable that the travel industry is excluded from the loss compensation system."