Self-Employed Facing the Brink Amid Economic Downturn and Sluggish Domestic Demand
Less Than 10% Expect Improvement Over Last Year
"Sales Decline Due to Weakened Consumer Sentiment" Cited as Biggest Burden
No Special Alternatives to Overcome Management Crisis, Sighs of Frustration
Only 5.5% of Businesses Plan to Hire Regular Employees
Empty commercial spaces are located throughout the commercial area near Ewha Womans University in Seodaemun-gu, Seoul. Photo by Kang Jin-hyung
"The monthly rent is overdue... but there are no customers..."
With the prolonged triple crisis of high inflation, high interest rates, and high exchange rates, combined with the aftermath of the December 3 emergency martial law, self-employed business owners are collapsing. Among them, 7 out of 10 reported a decrease in sales last year compared to the previous year, and more than half of the self-employed expect the business environment to worsen further this year compared to last year. According to the Korea Economic Association on the 25th of last month, 7 out of 10 self-employed individuals experienced a decline in sales last year compared to the previous year. The average sales decline rate was about 13%, and 4 out of 10 are considering closing their businesses within three years.
On the 12th, the job app Byeoruk Market surveyed 731 self-employed individuals about their "2025 Business Environment Outlook," and more than half of the respondents, 52.9%, answered that they expect the situation to be "worse than last year." 37.9% said it would be "similar to last year," while only 9.2% believed it would "improve compared to last year."
When asked when they expect the business environment to improve, the majority responded that "this year will be difficult." 61.0% of respondents pointed to "2026" as the recovery period, and 32.7% said recovery would only be possible "after 2027." Only 6.3% expected an economic recovery in 2025. Regarding this year's operational plans, the most common response was "planning to downsize the business" at 36.8%, followed by ▲ "expect no change" (35.3%) ▲ "considering temporary closure or shutdown" (12.2%) ▲ "considering expansion" (12.0%) ▲ "considering changing business type" (3.7%).
Regarding new hiring plans, the most frequent answer was "none at all" at 50.9%. The response "planning to reduce existing staff" (18.6%) also showed a high rate, followed by ▲ "no specific plans" (14.6%) ▲ "planning to hire mainly non-regular workers" (10.4%). Only 5.5% of self-employed individuals planned to hire regular employees. By business size, 70.1% of one-person self-employed and 47.1% of small businesses with fewer than 10 employees answered "no hiring plans at all," while among businesses with 10 or more employees, the most common response was "planning to reduce existing staff" (43.2%).
As the biggest burden in management, nearly half (41.7%) cited "sales decline due to weakened consumer sentiment." Many also pointed to ▲ fixed costs such as rent and public utility fees (22.8%) ▲ rising labor costs (14.2%) as burdens, followed by ▲ uncertain economic recovery outlook (8.9%) ▲ rising raw material and supply costs (7.7%) ▲ loan repayment burdens due to high interest rates (3.4%).
Next, when asked if they had any self-help measures to overcome the management crisis, 27.6% of respondents said "no special alternatives," while ▲ "menu and service price increases" (24.2%) ▲ "reducing employees" (19.7%) were also common cost-saving measures. Other responses included ▲ "changing business hours or days" (15.0%) ▲ "considering temporary closure or shutdown" (6.8%) ▲ "downsizing the business" (5.9%).
The reality is that it is difficult to expect the situation surrounding self-employment to improve. The warnings of economic recession are growing stronger. In its March economic outlook, the Korea Development Institute (KDI) stated, "The downside risks to the economy are expanding due to sluggish construction and worsening export conditions." This is the third consecutive month of such warnings since January. The economic situation is becoming even harsher due to the tariff war initiated by Trump. Because of this, analyses suggest that the crisis for self-employed business owners will peak this year. Experts unanimously agree that local governments should step up and prepare integrated policies that can provide practical help to self-employed individuals.
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