eFM News

[Anchor]

South Korea's government and ruling Democratic Party have been under mounting pressure to help struggling small businesses stay afloat during the pandemic.

They have been hit especially hard by the unprecedented social distancing restrictions implemented to contain the spread of the virus.

As our Hyoungjoo Choi reports, some officials are looking to find new ways to provide relief beyond one-off cash payments.

[Reporter]

The ruling Democratic Party has proposed setting up a scheme like France's solidarity fund to better support small businesses impacted by coronavirus restrictions.

Last year, the French government budgeted 7 billion euros to provide monthly grants of up 1,500 euros, or roughly 2 million won, to freelancers, the self-employed and small business owners with 10 or less employees that have been forced to stop working or shut down due to virus lockdowns and other measures.

Restaurants and businesses with up to 50 employees can receive up to 10,000 euros a month.

Under pressure from the government, French insurers have also donated 400 million euros to the fund to support businesses that were left without coverage because of COVID-19.

Some South Korean opposition lawmakers have criticized the idea of calling for private donations for a fund here as populist policy.

But Song Yoon-ah, researcher at the Korea Insurance Research Institute, says it could be a win-win strategy.

[Clip: Song]
"To help businesses survive, the government can provide subsidies and low-interest loans while insurance programs help them to recover from the damage and financial losses."

The government is pushing for legislation on compensating restaurants, cafes, and other mom-and-pop shops for losses caused by COVID restrictions, but how to fund it remains a major stumbling block.