hankyoreh

A “for lease” sign hangs from a storefront in Myeongdong shopping district in Seoul on Sept. 26, amid the protracted COVID-19 pandemic. (Yonhap News)

Lee Kang-kook

By Lee Kang-kook, economics professor at Ritsumeikan University

The main character was a worker at an automobile company. Losing his job in layoffs due to restructuring, he opened a fried chicken restaurant, then a Korean fast-food restaurant. Both of the businesses went under, leaving him saddled with 400 million won (US$336,000) in debt.

Recently, the drama series “Squid Game” has been taking the world by storm with its plot about people in similarly desperate situations playing life-or-death games as they vie for a huge cash reward.

According to reports, some people have even texted the telephone number shown in the series — which turned out to be someone’s actual number — to say that they were also drowning in debt and wanted to take part in the games.

In interviews, the show’s director has spoken about how the main character’s story is similar to those of mom-and-pop businesses and their struggles since the COVID-19 pandemic hit.

Indeed, the plunge in sales due to the contagion and social distancing have left these business owners’ very survival in jeopardy.

Representing one-fifth of people employed in South Korea, they are the ones who have suffered the biggest economic blow from disease control measures. We’ve even heard sad stories like the pub owner who recently died by suicide after giving up their apartment to be able to continue paying employee wages.

Debt has also skyrocketed for these small business owners, who depend heavily on face-to-face services. As of late March 2021, South Korea’s roughly 2.46 million self-employed business owners collectively shouldered around 832 trillion won (US$700 billion) in debt.

That number was up by fully 19% from the year before, rising at twice the rate of household loans in general. Loans from non-bank lenders, which tend to carry large interest burdens, have risen especially sharply, with increasingly more people borrowing money from three or more different financial institutions.

That burden is likely to only rise in the future amid interest rate hikes and loan restrictions. One survey of self-employed business owners showed 81% of respondents reporting that their liabilities had risen by over 50 million won (US$42,000) on average during the year since the pandemic erupted; around 45% said they were considering going out of business.

When it comes to disease control and economic growth, South Korea’s performance has been remarkable in comparison with other countries. But the compensation provided to the self-employed business owners who have suffered in the process has been negligible.

Even Japan allowed restaurant owners hit with restrictions on operating hours and bans on the sale of alcohol to receive 40,000 to 100,000 yen (US$360 to US$899) per day in government support while a state of emergency was in effect. That’s the equivalent of more than 10 million won (US$8,400) a month.

One article comparing different countries reported that restaurants in the US, France and Japan had received the equivalent of 100 million to 200 million won (US$84,000 to US$168,000) in government assistance since March 2020; in South Korea, the level was one-tenth of that.

According to International Monetary Fund figures, the South Korean government’s direct fiscal expenditures in response to the COVID-19 amounted to 4.5% of gross domestic product as of early June. This was much smaller than the 17.3% average for advanced economies.

The government has argued that this was because of successful disease control measures, which meant that the blow to the economy was relatively small. But everyone is aware that this “successful” disease response has been predicated on the sacrifices of self-employed business owners.

The government provided initial disaster relief payments to all South Koreans, followed by second to fourth rounds targeting small business owners and other groups. But the amounts involved have not been large.

A fifth round of payments excluded the top-earning 12% — an estimation based on national health insurance premium payments — but ended up the subject of controversy over the selection standards.

Many have argued that a more rational policy approach would be to make immediate universal payouts and then recoup the difference selectively when taxes are calculated. But the South Korean government has adamantly resisted such a path.

Meanwhile, Gyeonggi Province recently began making payments of 250,000 won — at a cost of 638 billion won (US$537 million) from the provincial budget — as a “basic disaster income” to high earners who did not benefit from the latest round of disaster relief funds.

But the Gyeonggi model of basic disaster income without increased taxes appears to be a long way in spirit from an actual “basic income” system, in which all citizens receive the same support and additional taxes are collected from high earners.

The best approach to government expenditures in response to COVID-19 would be one in which the budget is drastically increased, with large support to the self-employed business owners and others who have borne the brunt of disease control measures.

Legislation to compensate self-employed business owners for their losses has reportedly been passed, but the 2022 budget for it comes out to less than 2 trillion won (US$1.6 billion). Even when this year’s supplementary budget is factored in, it’s still only about 3 trillion won (US$2.5 billion) — much smaller even than the budget of 11 trillion won (US$9.2 billion) for the fifth round of disaster relief payments.

It’s enough to have some people saying that the recent deaths of small business operators aren’t suicides at all; they’re acts of social homicide, where all of us share in the blame.

“Squid Game” portrays the darkness of contemporary capitalism through its story about games where you must defeat others to survive, and about the desperate people driven to play such a brutal game by a hellish reality. For vulnerable workers and self-employed business owners left on the brink with debt that’s hard to bear, the story may sound very much like their own.

But even the people playing those survival games help one another at times. At the end of the series, the main character asserts that he is a person, not a horse.

It’s time for people to come together and put an end to this real-life “squid game.”

Please direct questions or comments to [english@hani.co.kr]