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Ratio of self-employed earnings to GNI falls to record low in 2017

All News 15:07 June 03, 2018

SEOUL, June 3 (Yonhap) -- The ratio of self-employed earnings to South Korea's gross national income (GNI) fell to record low levels in 2017, data from the central bank showed Sunday.

The Bank of Korea (BOK) said that the operating surplus of households and non-profit organizations in the country stood at 127.08 trillion won (US$118.2 billion) last year, up just 1 percent from a year earlier.

Household operating surplus reflects the earnings of small-scale merchants, and the BOK's latest data shows it making up 7.3 percent of GNI, down 0.3 percentage point from 2016.

This, it said, is the lowest reading since 1975, when such data began to be checked.

The central bank said household operating surplus actually posted double digit growth in the 1990s on an annual basis, although this has fallen to under 2 percent in recent years.

The poor numbers for small merchants are in contrast to national GNI, which expanded 5.1 percent on-year in 2017 to reach 1,730.4 trillion won.

"Market saturation resulting in stiffer competition has led to less profit for small-time businesspeople," a BOK source said.

He said there has been a surge in small retailers and eateries across the country due to the many South Korean baby boomers born between 1955 to 1963 who have been retiring in increasing numbers since the mid 2000s and moving en masse to open small businesses to make a living.

In related news, Statistics Korea said that in 2016, 60 percent of self-employed people made less than 40 million won per year, with 20 percent claiming they made less than 10 million won.

This is worrisome, as self-employed people accounted for 21.2 percent of all workers in 2016, a higher figure than the 14.2 percent average for member states of the Organization for Economic Cooperation and Development.

The National Assembly Budget Office (NABO) said in a recent report that less money being made by self-employed people is leading to a drop in household income.

"There is a need to get smaller companies to engage in more value-added businesses and to work out a way to resolve excessive competition," NABO said.

This file photo shows a notice for rent in downtown Seoul. This is becoming a commonplace sight as many small businesses close down their operations in the face of weak sales. (Yonhap)


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