The Korea Herald

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[Editorial] Employment policy

Self-employed, irregular workers need practical support

By Korea Herald

Published : Oct. 30, 2014 - 20:46

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Government figures showed this week the number of self-employed individuals and irregular workers has been rising continuously. This trend raises the need for government officials to review their existing employment policy and work out measures to enhance job stability.

The number of self-employed people registered with the local tax authority rose by more than 10 percent from 4.87 million in 2009 to 5.37 million last year. This increase is nearly six times the population growth rate for the cited period at 1.8 percent.

Meanwhile, data from the national statistics office showed the number of irregular workers in the country was up 2.2 percent from a year earlier to a record high 6.08 million in August.

The main common factor behind the growing numbers of self-employed individuals and nonregular employees is that more elderly retirees have been compelled to remain in the workforce to earn a living.

In the 12 months through August, the number of irregular workers in their 60s or older grew by more than 118,000, while corresponding figures for those in their 30s and 40s declined by about 17,000 and 26,000, respectively.

Most of the individuals who started their own business in recent years were elderly people who failed to find a new job after retirement.

Self-employed people account for about a quarter of the total employed population in Korea, far higher than the average 16.5 percent for the 34 member states of the Organization for Economic Cooperation and Development. What makes their situations worse is that too many people rush into a narrow range of businesses such as in the restaurant and lodging sector.

A large portion of the self-employed are struggling with excessive competition amid a prolonged economic slump, with their income having stagnated or declined for years. According to government figures, the average income of self-employed householders has remained at about 3 million won ($2,900) per month over the past decade ― a decline, if inflation is taken into account.

As a result, most mom-and-pop business owners are reeling under growing debt. Self-employed householders are saddled with an average debt of 120 million won, about three times that of salaried employees. They are likely to fall into poverty if their shops or restaurants fail. From 2003 to 2012, nearly 8 million independent businesses closed.

Given these conditions, it may be unwise to focus on strengthening protection and support for uncompetitive and unprofitable self-employed businesses. Instead, policies are needed to help self-employed individuals close their marginalized enterprises before it is too late. More desirably, retirees should be given more opportunities to retrain and find new work rather than having to start a business they have no experience in.

The increase in the number of irregular workers comes as the government is trying to create more regular jobs. This effort appears to be bringing in some result, given nonregular workers’ proportion of total employees showed a slight decrease from 32.6 percent last year to 32.4 percent this year.

Certainly, more regular jobs need to be offered, especially to young workers with college diplomas, who account for a third of irregular employees. But the increase in the number of nonregular laborers is not necessarily undesirable. It may be unavoidable, if elderly and female employment is to be further boosted.

What is more important is to narrow the gap of wage and other benefits between regular and temporary jobs. The wage disparity nearly doubled to more than 1.15 million won over the past decade.

More well-paying jobs, regular or irregular, should be created by eliminating unnecessary regulations and nurturing service industries.