With debts, South Korean companies resist the new crown virus rules | Business and Economy

Incheon, South Korea A few days before the end of 2021, Shen uploaded a video on YouTube. In Uijeongbu, on the northern edge of Seoul, the owner of a bar has a bold idea for New Year’s Eve.

“On December 31st of this year, I will open my bar as usual from 9pm to 5am,” he said in the video.

“This means I will ignore government restrictions.”

In mid-December, the South Korean government As COVID-19 cases soar to record highs across the country, commercial curfews are reintroduced. Restaurants and bars must be closed after 9pm. Violators will face fines or suspension of business.

Although South Korea avoided the total closure and stay-at-home orders that occurred in other countries during the pandemic, restrictions on business hours have been Severely hit small businesses.

Shin, who asked to reveal only his surname, is not the first to announce that he intends to ignore the curfew.

When a chain of coffee shops announced a few days ago that it would be violating the regulations, it sparked controversy on the grounds that the months-long curfew imposed in July caused financial difficulties.

Shen told Al Jazeera that he felt very encouraged when he heard the news.

“What they did made my heart burn,” he said. “I want to do the same for other business owners.”

Shin owns about 12 hotels in the Uijeongbu and the nearby coastal city of Incheon. He said his company has lost about 1.3 billion won (US$1.1 million) in the past two years.

“As a person, I have about 600 million debts, and only count debts due to restrictions,” he said.

Korean gymThe gym is one of the companies hit hardest by the Korean pandemic restrictions [File: Jeon Heon-Kyun/ EPA-EFA]

Bars and restaurants are not the only companies that have suffered losses. Indoor sports facilities such as the Oh Sung-young gym in Pocheon, a city in the northeast of Seoul, are among the biggest losers of the government’s pandemic policy.

“I expect at least some new members, but not so far,” Oh told Al Jazeera, referring to the new year’s business. “Only two or three membership extensions.”

The gym is one of the few companies that have been ordered to temporarily suspend operations. It was originally ordered to close in March 2020, and then it was closed in two more rounds.

The return of the curfew also required the gym to close before 9pm, causing many of Oh’s customers to suspend or cancel their memberships, cutting his income in half.

“Adults with regular jobs usually go to the gym after get off work around 8pm,” Oh said. “They don’t have time to wash up after exercise.”

Overall, the Korean economy has weathered the pandemic well compared to many of its peers, and the authorities reported fewer than 6,000 deaths.

“In the major advanced economies, [ours] It has returned to the level before the outbreak as quickly as possible,” President Moon Jae-in said in a speech to the National Assembly in October. “The average growth rate in the past two years has been even higher. [than the G7 nations]. “

“Weak consumption”

However, this growth is not consistent across all walks of life. Although conglomerates such as Samsung and Hyundai have achieved record exports, the income of many small companies has fallen sharply.

According to the National Bureau of Statistics, although the profits of South Korea’s top 100 companies fell by 2.5% in 2020 from the previous year, the profits of small businesses fell by 43%. The arts, sports and leisure sectors suffered the most, with profits falling by 85.2% year-on-year.

This imbalance may hinder the broader economy.

“The polarization of the labor market and household income reduces consumption,” KB Research’s Lee Seung-hun said in a report. “Weak consumption will hinder South Korea’s economic growth.”

Noh Min-sun, a researcher at the Korea Small Business Research Institute, said in a report that despite the impact of the latest restrictions, the government may be inclined to tighten fiscal policy due to concerns about inflation.

“The government needs to ensure that small businesses that cooperate during the pandemic measures will receive adequate compensation,” Noh said.

Many business owners complain that the government’s support measures are far from enough.

“Each of my companies received up to 20 million won (16,700 U.S. dollars) in compensation,” Shin said. “But a venue costs 12 million rent a month. How does this help me?”

Moon Jae-inSouth Korean President Moon Jae-in praised the country’s pandemic response measures for achieving better economic results than other countries [Jabin Botsford/ Reuters]

Oh said that he has received approximately 10 million won in compensation in the past two years, which is almost not enough to cover his monthly operating costs.

According to the government’s guidelines, compared with 2019, companies whose revenue decreased by 14 million won last year are entitled to less than 4 million won in compensation.

Critics say the government has been reluctant to provide generous support like other countries.

According to statistics from the International Monetary Fund, although economies such as Germany and Japan have introduced support equivalent to more than 15% of gross domestic product (GDP), South Korea’s expenditure has reached 6.4% of GDP.

The swelling household debt is one of the consequences. Last month, the Bank of Korea pointed out that, unlike other major economies dominated by government spending, during the pandemic, the private sector, especially households, led to rapid debt expansion.

After reaching a peak of nearly 8,000 cases in mid-December, the latest wave of outbreaks in South Korea appears to be basically under control.

Despite this, officials said that although the country’s 82% dual vaccination rate is the highest in the world, it remains to be seen whether the restriction will be extended when the current round of vaccination ends on January 16.

At the same time, the despair of business owners is growing.

Despite increasing debt, Oh applied for another loan.

“I have no choice but to keep accumulating debt, because if I resign now, I have nowhere to go,” he said. “I just hope the epidemic will pass quickly.”

Anger is also rising. In recent weeks, hundreds of small business owners have gathered in Seoul to protest these restrictions.

In the end, Shen did not stage his little rebellion on New Year’s Eve, but planned to let people hear his voice soon-only this time, he will not be alone.

“I received a lot of calls from different business owner organizations,” he said. “One of them asked me not to do this this time. They said they were coordinating their actions and asked me to join them in due course.”