In fact, according to Statistics Korea, the number of self-employed individuals in the country has rapidly decreased, recording 5.5 million in January this year. This figure is comparable to the level during the COVID-19 pandemic and is smaller than during the IMF foreign exchange crisis in 1997 (5.9 million), 1998 (5.61 million), and the global financial crisis in 2008 (6 million) and 2009 (5.74 million).
The restaurant industry, which has the highest number of self-employed individuals, has also been hit hard. According to Pinda's AI commercial district analysis platform 'OpenUp,' out of 818,867 restaurants in 2023, 176,258 have closed, resulting in a closure rate of 21.52%. This means that one in five restaurants has shut down, a figure that has increased by about 82.6% compared to the most severe period of COVID-19 in 2020 (96,530 closures).
The rapid deterioration of the self-employed environment, with closure rates increasing even more than during the COVID-19 period, can be attributed not only to the overall economic recession and high prices but also to the phenomenon of 'blind entrepreneurship,' where individuals jump into starting a business without accurate information about location and market demand.
In fact, a survey conducted by Pinda in May among 1,840 users of OpenUp revealed that the top reason for business closures among those with closure experience was 'failure in selecting the right location and industry' (25%). When asked about the duration of their business operations, more than half (52.0%) responded that they did not last three years. The highest percentage of business owners (42.1%) indicated they operated for 'more than 1 year but less than 3 years,' while about one in ten (9.9%) reported operating for 'less than 1 year.'
As the suffering of self-employed individuals continues to grow, both the government and private companies have stepped in. The Ministry of SMEs and Startups has been overseeing the '2025 Hope Return Package Re-Entrepreneurship Project' in collaboration with the Small Business Corporation since the beginning of this year. This initiative aims to provide one-stop support for the rapid closure of micro-businesses that cannot even close down, while also assisting them in securing stable employment as wage workers or properly preparing to re-enter the self-employment market.
Pinda is also participating in this effort by providing an 'AI Re-Entrepreneurship Diagnostic Report' service, which integrates on-site diagnostics and business area analysis based on OpenUp, to help small business owners who have already closed or are about to close their businesses. When small business owners participate in a diagnostic survey for re-entrepreneurship, AI compiles information about the commercial area and nearby market where the planned business location is situated, analyzing expected startup costs and average monthly sales.
Hwang Chang-hee, head of Pinda's OpenUp, stated, "Location selection determines the success or failure of a business, but due to severe information asymmetry in the entrepreneurship market, many self-employed individuals have struggled due to a lack of relevant data. We want to take the lead in helping more small business owners make a comeback based on Pinda's AI and big data capabilities and contribute to reducing the closure rate."
[Lee Ho-jun, Reporter]
