The government plans to provide loans of 600 billion won ($528.60 million) to support self-employed business owners who are struggling with lackluster private spending, soaring rent costs and tougher competition, the financial regulator said on March 25.

Choi Jong-ku, chairman of the Financial Services Commission, unveiled the plans as he met owners of self-employed businesses in Daegu, 300 kilometers south of Seoul, earlier in the day. 

Loans of 450 billion won will be offered to self-employed people who have difficulty securing loans, the senior official said.

An additional 120 billion won will be provided to those who have been suffering from worsening business conditions, Choi said.

The remaining 30 billion won in loans will help former self-employed people, who shut down their shops, and restart other businesses.

The plan is aimed at “giving an opportunity to self-employed people who are in a difficult situation to regain their footing,” the policymaker told the meeting, according to a statement released by the FSC.

At the end of November 2018, the number of self-employed people stood at 5.63 million, accounting for about 25 percent of the total workforce.

In 2017, self-employed people accounted for 25.4 percent of all workers in Korea, compared with 15.5 percent in the European Union, 10.4 percent in Japan and 6.3 percent in the United States.

Korea hiked its minimum wage by 16.4 percent last year and raised it by a further 10.9 percent in 2019.

The sharp increase has stirred up strong objections from small merchants, who complain of higher labor costs amid an economic downturn. Critics have argued that the increase is hurting part-time jobs and weighing down the local economy as a whole.

By Ram Garikipati and newswires (ram@heraldcorp.com)