The government has released an outline of measures regarding small businesses. It wants to keep too many from entering the market excessively, encourage the liquidation of those that have lack promise, and support those that have potential. It has come up with such plans because small-scale, self-employed business operations have saturated the market. The number of people who are self-employed account for 29.5 percent of the country's workforce. That is twice the OECD average of 13.8 percent. There is no way they can do good business. The Special Committee on Mid and Small Sized Businesses did a study that found only 8.3 percent of independent businesses are actually profitable. The government appears to have arrived at the conclusion that there could be a massive rush of bankruptcy cases.
We share its sense that a problem exists. But we doubt whether measures that have a little something for every situation will be effective. The reason there has been an excessive number of independent businesses since the financial crisis of 1997 is because workers have been laid off in massive numbers. Many went into business for themselves in a struggle to survive. The measures to resolve that are nothing more than the usual, things like creating jobs, job training, and "wage peaks." Encouraging liquidation is not something the government should be involved in. As the study shows, 39 percent of people operating their own businesses want the government to do something bout the overabundance of independent businesses, but only 3.3 percent are willing to close down. There is nothing else for them to do, why would they be willing to quit? The regular components of such government plans, like the expansion of special exception guarantees or financial support, could have the same negative side effects as they always have.
We are not saying the government should not do anything. We do find nice measures such as the operation of a system that would help independent businessmen make their own judgments about feasibility, but getting ambitious about resolving everything at once is not a sure approach. The right approach would be to do what can be done, and do it one thing at a time. The government should rethink its plans if they include directives from the president or thoughts about trying to accomplish something regardless of the means.
The Hankyoreh, 1 June 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Ambition Alone Won't Help Independent Businesses |
