Up to 20 Million Won Upon Business Closure: Safety Net to Be Built for Young Small-Business Owners

[Financial News] The government has begun building a social safety net for young small-business owners. It plans to introduce measures including Youth Safety-Net Policy Insurance, which covers risks that may arise during the business-startup process, as well as childcare support for one-person small-business owners and subsidies for industrial accident insurance premiums.
The Ministry of SMEs and Startups held a meeting on building a social safety net for young small-business owners at KT&G Sangsang Planet in Seongdong-gu, Seoul, on the 2nd and announced these measures.
Lee Byeong-gwon, Second Vice Minister of SMEs and Startups, emphasized, "Although interest in and challenges related to starting a business have recently grown, young small-business owners often launch businesses without having accumulated sufficient capital. As a result, a temporary crisis is highly likely to develop into a business crisis and ultimately a livelihood crisis. Starting next year, we will introduce new programs to strengthen the social safety net for small-business owners and expand and improve existing support programs."
The policy package was designed around three pillars: a safety net for young people starting and pursuing businesses, a livelihood safety net, and a social insurance safety net.
Starting next year, Youth Safety-Net Policy Insurance will be introduced to reduce the risk of business closure for young people starting businesses. For small-business owners who have been operating for less than five years, success incentive payments will be provided when they reach three, five, and seven years in business, and accumulated funds will be paid at maturity. If they temporarily suspend operations, fixed costs such as rent and labor costs will be supported at 100,000 won per day for three months. In the event of business closure, a lump-sum payment of up to 20 million won will be provided for restart costs, rent, and employee wages.
Support will also be strengthened to reduce small-business owners’ health and childcare burdens. Alternative labor costs will be covered when they temporarily suspend operations because of health problems, and support will be expanded to prevent income interruptions caused by childbirth and childcare.
Support through employment and industrial accident insurance will also be enhanced. The government plans to subsidize up to 70% of monthly industrial accident insurance premiums and up to 80% of employment insurance premiums for five years. Those who close their businesses involuntarily will receive unemployment benefits for up to seven months, while new medical-treatment and temporary-suspension benefits will be introduced for small-business owners injured in industrial accidents.
The government will also provide health-care support, taking into account that small-business owners often postpone health screenings because of the financial burden associated with temporarily suspending operations. Small-business owners eligible for national health screenings will receive up to 100,000 won to cover business suspension or alternative labor costs resulting from the screening.
Young entrepreneurs and small-business owners who attended the meeting said that support levels needed to be increased, among other measures.
Lee explained, "Although the budget for the small-business owners’ social safety net was allocated at a lower level than originally planned, I expect a larger amount to be reflected in the budget the year after next if the policy’s effects become evident."
[email protected] Lee Jumi Reporter