Three out of Four Self-Employed Earn Less Than 1 Million Won a Month... 940,000 Cases of 'Zero Income'

Less Than Half of the Minimum Wage Applied Monthly Salary Level

Three out of four individual business owners reported monthly comprehensive income tax amounts of less than 1 million won. This is less than half of the monthly wage of 2.06 million won based on this year’s minimum wage.

According to data submitted by the National Tax Service to Park Seong-hoon, a member of the People Power Party, among 11,464,368 comprehensive income tax filings by individual business owners in 2022, 75.1%, or 8,609,018 cases, reported monthly income below 1 million won (12 million won annually). Even considering discrepancies between actual income and tax filings, this indicates that a significant number of self-employed individuals are effectively low-income earners living in poverty. Among them, 944,250 cases, or 8.2%, reported “0 won” income.

The number of low-income self-employed individuals has been rapidly increasing every year. Filings reporting monthly income below 1 million won surged from 6,108,751 cases in 2019 to 7,947,028 cases in 2021 during the COVID-19 pandemic. Reports of “0 won” income also rose from 649,016 cases in 2019 to 831,301 cases in 2021.

This reflects the structural difficulties faced by many self-employed individuals who choose entrepreneurship after being displaced from wage employment, including burdens such as commission fees and delivery charges. Especially, the retirement of the second baby boom generation (born 1965?1974) is expected to accelerate the crisis in self-employment.

Park Seong-hoon stated, “The reality that about 75% of self-employed individuals earn less than 1 million won per month shows how difficult the economy is for small business owners and the self-employed,” and emphasized, “Comprehensive measures are needed, including improving the barriers to entry.”

Closure Rate Hits Record High... More Severe Than the Pandemic

As the economic downturn and high inflation continue, the closure rate of individual businesses is also rapidly increasing. The situation is more severe than during the pandemic, indicating that the management difficulties of small self-employed businesses have reached their limit.

According to data on the “Status of Individual Business Owners Over the Past 10 Years” received by Ahn Do-geol of the Democratic Party from the National Tax Service, while about 1,147,000 individual businesses opened last year, 910,000 (79.4%) closed. This means that for every 10 stores that opened, 8 closed. This is the highest figure in 10 years since 2013 (86.9%).

The number of individual businesses that reported closure last year was 900,000, an increase of 110,000 from 800,000 the previous year. Meanwhile, newly established individual businesses numbered 1,150,000, a decrease of 60,000 from 1,210,000 the previous year. During the COVID-19 pandemic, when self-employed individuals faced difficulties due to quarantine and business restrictions, the number of startups increased and closures decreased, causing the closure rate in 2022 to fall by 2.7 percentage points compared to 2019. The complaints of self-employed individuals that the situation is now more difficult than during the pandemic are also supported by statistical data.