Biggest Challenge for Non-Metropolitan SMEs Is "Securing Personnel"

Korea Federation of Small and Medium Enterprises Announces Results of "Opinion Survey on Policies to Support Local Small and Medium Enterprises"

The biggest challenge facing small and medium enterprises outside the Seoul metropolitan area was found to be securing personnel. The main factor preventing companies in the metropolitan area from relocating to non-metropolitan regions was also the reluctance of existing employees to move. This has led to the assessment that resolving the labor shortage in non-metropolitan areas is the most urgent task for balanced regional development.

On February 11, the Korea Federation of Small and Medium Enterprises announced the results of a survey titled "Opinion Survey on Policies to Support Local Small and Medium Enterprises," which contained these findings. The survey was conducted on 772 small and medium enterprises to gauge how business owners perceive policies supporting local SMEs, to identify areas for improvement, and to derive policy tasks. In the case of manufacturing, companies with at least 10 full-time employees were included, and in non-manufacturing, companies with at least 5 full-time employees were included, excluding microbusinesses. A total of 203 SMEs in the Seoul metropolitan area and 569 SMEs in non-metropolitan areas participated.

Sectors that strongly feel the gap in business conditions compared to SMEs in the Seoul metropolitan area. Korea Federation of SMEs

According to the survey, among small and medium enterprises in the metropolitan area, the most common response regarding the gap in business conditions compared with companies in non-metropolitan areas was "moderate" (48.3%). In contrast, among small and medium enterprises in non-metropolitan areas, the most common response was "the gap is large" (63.4%), revealing a perception gap depending on location. Regardless of location, the sector in which companies reported experiencing the largest gap in business conditions was securing personnel. This was chosen by 69.7% of metropolitan companies and 66.2% of non-metropolitan companies. "Infrastructure such as transportation, logistics, and location" followed, at 67.4% and 51.2%, respectively.

In addition, 99.5% of the 203 companies in the metropolitan area responded that they have "no plans to relocate to non-metropolitan regions." The reasons cited for not planning relocation included "reluctance of existing employees to relocate to non-metropolitan areas" (47.0%), "increased distance from existing clients" (44.6%), "deterioration in logistics, transportation, and location conditions" (32.7%), and "difficulties in securing personnel" (28.7%).

Among small and medium enterprises in non-metropolitan areas, 40.4% responded that support policies for local SMEs from the central government are "insufficient," and 43.6% said the same about support from local governments. The main reasons cited for feeling that central government support policies are insufficient were "difficulties in securing personnel" (53.5%), "difficulties in accessing investment and finance" (43.9%), and "poor infrastructure such as transportation, logistics, and location" (33.0%). For local government support policies, the responses were in the order of "difficulties in securing personnel" (61.7%), "poor infrastructure such as transportation, logistics, and location" (41.5%), and "difficulties in accessing investment and finance" (36.7%).

As areas considered most helpful for revitalizing local small and medium enterprises, respondents selected "support for securing personnel" (47.5%), "expansion of investment and financial support" (46.4%), and "support for relocation of large and mid-sized companies to local areas" (26.4%), in that order.

Kim Heejung, Head of the Economic Policy Division at the Korea Federation of Small and Medium Enterprises, said, "The issue that small and medium enterprises in non-metropolitan areas feel most acutely is securing personnel," adding, "There needs to be deeper consideration of policies that support the utilization of diverse labor, including middle-aged workers, women with career breaks, and foreign workers, as well as the provision of employment subsidies. Fundamentally, it is important to strengthen corporate competitiveness so that quality jobs can be created."

Kim added, "The government's policy of region-led growth can be seen as a timely policy direction in that it strengthens the foundation for regions to build their own innovation capabilities and promotes the strengthening of competitiveness and growth of small and medium enterprises."

This content was produced with the assistance of AI translation services.