After the Emergency Martial Law Incident, Reservations Canceled One After Another... 5 Out of 10 Small Business Owners and Self-Employed Suffer Losses

Emergency Survey of 505 Food Service and Accommodation Operators by the Korea Federation of SMEs

The Korea Federation of Small and Medium Business (Kbiz) recently announced the results of an emergency survey on December 16 to assess the damage status of small business owners and self-employed individuals amid the unstable domestic economic situation.

According to the survey, 46.9% of small business owners and self-employed individuals suffered direct or indirect damage, such as group reservation cancellations, due to the uncertainty in the domestic political situation since December.

A traditional market in Seoul on the 5th, Small Business Owners' Day. Photo by Yonhap News

Major damage cases included "cancellation of year-end group dinners such as year-end parties" (food service industry) and "cancellation of guest stays and inquiries about safety" (lodging industry). Additionally, 46.6% of respondents answered that although they have not yet suffered damage, they believe there is a possibility of future damage, while 53.4% responded that there is no such possibility.

A lodging business owner in Sokcho, Gangwon-do, stated, "Since the declaration of martial law, there have been no reservations or inquiries," adding, "On a monthly basis, there used to be 1 to 2 group reservations and about 60 individual reservations, but since the situation, there has been no movement at all, so the current reservation and occupancy rate is 0%."

When asked how long the current uncertainty in the domestic economy is expected to last, 40.4% answered "1 to 2 years," which was the highest, followed by "within 6 months" at 30.1%, "long-term over 2 years" at 17.8%, and "only until the end of this year" at 6.1%.

Regarding efforts to improve the business environment to overcome the crisis, "cost reduction such as cutting costs and restructuring" was the highest at 60.4%. This was followed by "strengthening promotions such as conducting promotions" (11.3%), "expanding sources of business funds" (8.7%), and "seeking business diversification" (3.2%), but 16.4% responded that they are making "no improvement efforts."

Meanwhile, when comparing this year’s business conditions to last year, 83.6% responded that it is "difficult" (44.2% very difficult, 39.4% somewhat difficult), 14.0% said "similar," and only 2.4% said "smooth."

The main reasons for the worsening business conditions this year (multiple responses allowed) were "decrease in sales" at 74.6%, "increase in raw material costs" at 41.0%, "increase in labor costs" at 40.8%, and "high interest rates" at 34.8%, with the ongoing domestic demand slump and the three highs (high prices, high interest rates, high exchange rates) being the primary causes.

Choo Moon-gap, head of the Economic Policy Headquarters at Kbiz, emphasized, "The expectations of small business owners and self-employed individuals who were hoping for year-end special demand have been shattered," adding, "The National Assembly, government, and the small and medium business sector must come together to devise measures to revive the domestic economy."