Korea to Build Safety Net for Young Small Business Owners

The South Korean government is moving to build a social safety net for young small business owners, easing the burden of startup failure and extending support to health care, childcare and second chances after a business closes. The plan creates a new "startup assurance policy insurance" program covering risks that can arise while launching a business, and expands unemployment benefits and industrial accident insurance for the self-employed.

The Ministry of SMEs and Startups announced the 2027 policy direction for the small business social safety net at a policy roundtable held on the 2nd at KT&G Sangsang Planet in Seoul's Seongdong district.

The policy is built on three pillars: a safety net for young entrepreneurs taking on new ventures, a safety net for daily life, and a social insurance safety net. The ministry drew up the measures based on views gathered at a series of roundtables on the small business safety net held from May through July.

The startup assurance policy insurance is designed to let young people take on entrepreneurship with less fear of failure. By spreading part of the risk when unexpected trouble strikes after launch, the ministry aims to improve the odds that a business can return to normal operations or that the founder can try again.

Support to ease health and childcare burdens will also be strengthened. The government will cover business suspensions caused by health problems and the cost of hiring replacement workers, and will act to prevent income disruptions tied to childbirth and child-rearing. Expanded unemployment benefits and newly created industrial accident insurance support will broaden social insurance coverage against business risks such as closure and workplace injury.

In the open discussion that followed the announcement, young business owners described the difficulties they had faced from startup through day-to-day operations. Participants said support for crises that can arise in the actual course of running a business has not been sufficient, and agreed on the need for a social safety net policy for small business owners.

Lee Byung-kwon, Second Vice Minister of SMEs and Startups, said it is important to create an environment where young people and small business owners who started out with distinctive ideas can keep their businesses running, and where they can try again even if they are forced to close. "Based on the voices we have heard on the ground, we will continue building a solid social safety net that helps small business owners hold on through temporary crises and get back on their feet even if closure is unavoidable," the vice minister said.

The ministry plans to reflect the views raised at the roundtable in working out detailed eligibility rules and implementation methods, then begin the programs in earnest next year.