Small Businesses Borrow More on Minimum Wage Hike
09 March, 2019
Loans to restaurants, retail and wholesale businesses that were most badly hit by the steep rise in the minimum wage surpassed W200 trillion last year (US$1=W1,129).
Many people who took early retirement or lost their jobs opened small eateries, and pressure from the minimum wage drove many to take out business loans to keep themselves afloat.
According the Bank of Korea on Wednesday, loans to the service sector increased by W58.7 trillion over the whole of last year on-year while 25,000 new businesses opened their doors.
A man tots up daily sales at his restaurant in Seoul.
Of the amount, restaurant, wholesale and retail businesses accounted for W19.2 trillion, bringing the total loans to over W200 trillion for the first time, up 9.5 percent from 2017. It was the biggest hike since relevant statistics began in 2009.
Loans increased particularly in the rust belt of Ulsan, South Gyeongsang Province, South Jeolla Province, and North Gyeongsang Province with their dying car and shipbuilding industries.
Many people who lost their jobs in these regions opened their own small eateries or corner shops. Seoul saw a 5.5 percent increase, less than the national average of 6.6 percent.
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