A Study of the Living Status of the Self-Employed to Respond to Low Fertility and Aging

Abstract

The share of the self-employed in total employment in Korea is very high. As of 2008, the share of the Korean self-employed was 31.3%, nearly twice as much as the OECD average of 15.8%. In Particular, after the 1998 Asian Financial Crisis, the share had risen to 30% of total employment. After that, there was a downturn in its share, and in 2003 when the Credit Crisis occurred, it largely declined. And since 2006, it has sharply fallen again. The self-employed sector has a large share of the Korean economy, but its productivity and competitiveness is considered to be low. It is widely agreed that the share of the self-employed is quite large compared to the Korea’s economic scale, but there are growing concerns that the abrupt restructuring of the sector can have a negative effect on Korea’s economy. Therefore, it is required to come up with proper measures so that the restructuring of the self-employed sector is carried out gradually, and the household economy of the self-employed is not undermined in the process of the restructuring. Very aware of this, the Korea Institute for Health and Social Affairs (KIHASA) conducted a large- scale survey on the living status of the self-employed with less than 5 employees as of December 2011. Based on the results, the KIHASA understood the current status of health, child birth, child-rearing environment, welfare services, the preparation of post-retirement life, and social participation of the self-employed, and examined ways to promote related policies. The survey analysis finds that the poverty rate of the self-employed is low, but the overall income level is quite lower than that of paid workers. The result analyzed by income quintile is also the same, meaning that the income of self employed people is lower than that of paid workers. When it comes to the childbirth rate, the fertility rate of the self-employed seems to be getting lower. The expected number of children of the self-employed is predicted to be fewer than that of total fertile women, and the self-employed plan to have fewer children compared to the fertile women due to various restrictions. Therefore, measures are needed to reconcile work and family life and to make the self-employed be direct beneficiaries of old age income security system so that they can feel comfortable about child-bearing and ?rearing. Against people’s expectations, the survey results show that the overall health status of small business owners is better than the result of the Korea National Health & Nutrition Examination Survey for the general public. Nevertheless, considering their working conditions, it is necessary to strengthen healthcare services for small business owners who have not benefitted from the social security system. As to the preparation of post-retirement life, the retirement age that the self-employed wish is higher than that of paid workers. Low income self-employed people are highly likely to face unprepared post retirement life if they do not fully prepare stable old age income during their work period. Therefore, the national level support programs for old age income security are required so that the self-employed themselves can secure their own old age income during their work period. For the career history of the self-employed, more than half of the self-employed with less than 5 employees were paid workers before they became self-employed, and most of male self-employed people were paid workers before running their own businesses. More and more people in their 40s and 50s are getting self-employed, and the average period working as a paid worker is longer than the period working as a self-employed. In addition, it is very rare to change their businesses and to have plans on closing their businesses in the future. As a result, self-employed people are least likely to become paid workers again. Therefore, what is needed for the self-employed is to strengthen the welfare system and social security net for them, rather than promoting policy measures to transit self-employment into paid employment.