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[Editorial] Rules for financial support

Specific, fair rules needed before extending financial support to small biz owners

The government announced Friday it would offer additional financial support to small businesses and self-employed people to minimize their damages due to a new set of social distancing rules that took effect from Saturday.

Under the new rules, up to four people are allowed to meet for private gatherings and businesses will be subject to a curfew of 9 p.m. or 10 p.m. Those who are fully vaccinated will be able to dine out at restaurants and cafes, while those who are yet to be vaccinated will have to eat alone or order takeout.

It is inevitable that the new rules will significantly cut the number of customers and hurt the already battered business of many small restaurants and cafes across the nation.

In a bid to compensate for reduced revenues, the government said it will provide 1 million won ($840) each to 3.2 million small businesses and merchants. The forthcoming subsidy is part of a 4.3 trillion-won package to support businesses struggling to cope with hard times due to the pandemic.

A closer look into the plan, however, shows that there are problems and flaws that would likely disappoint small-business owners facing greater losses as a result of toughed virus restrictions.

First, a sense of disappointment at the government’s COVID-19 policy runs deep. The majority of small-business operators had expected a stronger recovery in sales toward the end of the year, with the government pushing ahead with the loosening of social distancing rules under the “Living with COVID-19” scheme.

But the spike in new virus cases and deaths, as well as the staggering health care system hit by the soaring number of patients seeking treatment at hospitals, forced the wishy-washy government to reluctantly stop the phased return to normal.

The constant flip-flop in government measures are a source of frustration for many merchants, who are now unwilling to trust in the policymakers’ assurances.

Second, the government’s cash handout of 1 million won, arranged in a hurry, is nothing if not a sign that there is no systematic support system for business operators who continue to suffer losses, even with the third year of COVID-19 looming large.

In July this year, the National Assembly passed a bill regarding compensation for small-business owners and self-employed people, but it is not enough to help out those who confront massive losses whenever social restrictions are imposed.

In response to the government’s stop-gap measures, several associations representing small businesses plan to hold a large-scale protest rally in central Seoul on Wednesday and reportedly are considering closing down their shops temporarily.

Third, the plan to provide a cash handout of 1 million won for any business operator who sees even a slight drop in revenue -- without assessing actual losses for specific cases -- is problematic. Prime Minister Kim Boo-kyum mentioned the need for “more comprehensive support,” but the wider scope does not necessarily mean fair and proper compensation.

The fixed amount of the latest financial support cannot make up for the big losses incurred at some businesses. For those that have to swallow huge amounts of losses, the government’s handout could be just a sort of “consolation money.”

Politicians and lawmakers are debating the need for another supplementary budget to help out small-business operators, but what matters is how the money is spent.

The top priority in allocating the budget should be directed toward those which suffer the most. To that end, the government should step up assessing financial damage as accurately as possible. Utilizing tax records, for instance, might help compile objective data for the actual losses.

Since the onset of COVID-19, the government has handed out a total of 22 trillion won in financial support to small merchants, but without fair standards, some fear it will only end in a repeat of the same mistakes.

By Korea Herald (khnews@heraldcorp.com)
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