SME Manufacturing Output Declines for Second Consecutive Month... Employment Also Falls

SME Manufacturing Output Down 3.4% in June, While Service Sector Sees Modest Growth
SME Employment Drops by 72,000; Daily Workers Decrease by 48,000

In June, production in the small and medium-sized manufacturing sector declined compared to the same month last year, marking a decrease for the second consecutive month. Employment indicators also worsened, with a significant drop in construction and manufacturing jobs leading to a sharp decrease in daily workers. This has added to the overall burden on the SME sector, which is already facing sluggish domestic demand and external uncertainties.

According to the August 2025 issue of "KOSI SME Trends," published by the Korea Small Business Institute on August 28, production in the SME manufacturing sector in June fell by 3.4% year-on-year. This decline was attributed to a reduction in the number of business days and ongoing challenges in the domestic market. Meanwhile, production in the SME service sector saw a slight increase of 0.9% during the same period.

Cooling fog is being operated to help workers cool down at the urban environment maintenance project site in Cheonho 4 Promotion Zone, Gangdong-gu, Seoul. Photo by Kang Jinhyung

Retail sales in June reached 53.3 trillion won, up 1.5% from the same period last year. Sales of durable goods rose by 4.1%, and non-durable goods by 1.9%, but sales of semi-durable goods decreased by 2.9%.

Last month, the number of people employed by SMEs stood at 25,649,000, a decrease of 72,000 compared to the same month last year. While the number of employees at companies with 5 to 299 workers increased by 72,000 during this period, the number of employees at companies with 1 to 4 workers fell by 144,000, resulting in an overall decline in employment.

By industry, employment in manufacturing and construction fell by 90,000 and 110,000, respectively, driving the overall decline. Among wage workers at SMEs, the number of regular workers and temporary workers increased by 70,000 and 23,000, respectively, but the number of daily workers decreased by 48,000.

The number of new startups in June was 94,111, an increase of 1.1% year-on-year. Of these, the number of technology-based startups rose by 5.2% to 17,632. By industry, the number of startups in manufacturing decreased by 7.2%, and in construction by 4.4%, while the service sector saw an increase of 2.2%.

The Korea Small Business Institute stated, "With indicators such as production, employment, and startups remaining sluggish, particularly in the SME manufacturing sector, the expansion of external uncertainties is expected to act as a downside risk going forward. It is necessary for policymakers to continuously monitor trends in high-risk industries and analyze domestic transmission channels to prevent damage to SMEs."