Targeting 48,000 young entrepreneurs with businesses under five years old
Government to cover 60–80% of premiums
Monthly 500,000-won childcare allowance for solo self-employed also planned
The government plans to introduce a new "startup safety insurance" policy that will pay young small business owners up to 20 million won ($14,600) if they close their businesses. It is also pursuing plans to provide temporary closure subsidies when owners must shut down for medical checkups, and to offer a monthly childcare allowance of 500,000 won to solo self-employed workers.
The Ministry of SMEs and Startups unveiled the policy direction for its 2027 small business social safety net on Wednesday at KT Corp's Sangsang Planet venue in Seongdong-gu, Seoul, during a policy forum on building a social safety net for young small business owners. The measures were drawn up based on feedback gathered at a series of small business social safety net forums held from May through July.
The ministry will create the startup safety insurance program targeting 48,000 young entrepreneurs who have been in business for less than five years. It plans to cover 60 to 80 percent of annual premiums, depending on how long the business has been operating.
Policyholders who close their businesses due to falling sales, illness or a disaster will receive a lump-sum payment of up to 20 million won, which can be used for costs such as re-launching a business, office rent and employee wages. Those who temporarily suspend operations due to marriage, childbirth, a disaster or illness will receive up to 100,000 won per day for a maximum of three months to cover fixed costs including office rent, labor and utility bills.
Young entrepreneurs who keep their businesses running will also benefit. Those who reach three, five or seven years in operation will receive a 10 million won business encouragement grant, and those who maintain their business until the policy matures will receive compound-interest returns on accumulated savings.
The government will also build a "life safety net" to ease the health and childcare burdens on small business owners. Under the plan, about 2 million small business owners eligible for health screenings will receive 100,000 won to cover temporary closure costs or substitute labor costs during their checkups. The ministry is also working with the Ministry of Employment and Labor to provide a childcare allowance of 500,000 won per month for up to three months, totaling a maximum of 1.5 million won, to solo self-employed workers.
The social insurance safety net will also be expanded. The ministry plans to increase the number of beneficiaries eligible for employment insurance premium support — which covers up to 80 percent of premiums for five years to help closed businesses qualify for unemployment benefits — from 42,000 this year to 55,000 next year. A new program will also be introduced to support small and medium-sized enterprise owners in enrolling in industrial accident insurance, allowing them to receive medical and leave benefits in the event of a workplace injury.
The ministry is organizing the policies around three pillars: a safety net for youth startups and entrepreneurial risk-taking, a life safety net covering health, caregiving and childcare, and a social insurance safety net against business closure and industrial accidents. The ministry plans to gather additional feedback from the field to finalize the details and implementation methods, with full rollout of the related programs set to begin next year.
A key feature of the measures is that they broaden the scope of small business support beyond startup funding and policy financing to cover risks that arise during the course of running a business, such as closure, illness and childcare. The startup safety insurance in particular is designed to cover both outcomes — paying re-launch costs to young entrepreneurs who close their businesses while also providing encouragement grants and savings returns to those who keep operating. However, the specific details of each program may change as the policies are developed further.
Lee Byeong-gwon, second vice minister of SMEs and Startups, said it is important to create an environment where young entrepreneurs and small business owners who start out with unique ideas can keep their businesses going, and where those who close for unavoidable reasons can try again. "We will continue to build a solid social safety net that gives small business owners the strength to weather temporary crises and the ability to get back on their feet even if they are forced to close," he said.
boo@heraldcorp.com
