Small Business Owners Hit Hard by COVID-19... "Dedicated Deduction System Needed"

The streets of Myeongdong, Seoul, are quiet on the 6th amid the ongoing COVID-19 situation. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Lee Junhyung] "Small business owners constitute an important sector, accounting for 93% of all domestic enterprises and about 43% of the workforce, but they have been hit hard by COVID-19. With the limitations of government support, there is a need to establish a dedicated mutual aid system for small business owners."

On the 20th, Professor Emeritus Lee Jongwook of Seoul Women's University stated this at the 'Small Business Owners Mutual Aid Association Policy Research Results Presentation' held at the Small Business Owners Federation in Yeouido, Seoul. At the presentation, results related to the 'Study on the Establishment of a Social Safety Net Mutual Aid Association for Small Business Owners,' conducted last year as part of the Small Business Federation's policy research project by the Korea Mobility Society, were disclosed. Professor Lee said, "A mutual aid system is necessary to increase the financial assets and welfare of small business owners who have low social bargaining power," adding, "It could serve as a means to provide retirement income by complementing the National Pension system."

The Korea Federation of Micro Enterprise held the 'Micro Enterprise Mutual Aid Association Policy Research Results Presentation' on the 20th at Sogongyeon in Yeouido, Seoul. [Photo by Korea Federation of Micro Enterprise]

Professor Lee emphasized the legal basis for the small business owners' mutual aid system. He stated, "The establishment of a mutual aid system for small business owners is specified in Article 26, Chapter 4 of the 'Small Business Basic Act,'" and argued, "Unlike the current mutual aid products focused on small enterprises, a dedicated mutual aid system reflecting the characteristics of small business owners in terms of support and protection should be promoted." He continued, "In the United States, five types of self-employed mutual aid systems are operated under related legislation, each providing income deductions and loan programs. There are also measures such as the government and local governments supporting the mutual aid funds for small business owners by allocating a certain portion of small business owners' tax payments beyond subscriber contributions."

At the presentation, Oh Sehee, President of the Small Business Owners Federation, said, "The need for a specialized mutual aid system for small business owners that can enhance their self-sustainability during the COVID-19 crisis is more urgent than ever," and added, "We plan to actively respond by forming a task force (TF) within the Small Business Federation to introduce the small business owners' mutual aid system."