Youth Safety Policy Insurance and New Industrial Accident Insurance Support for Small Business Owners (Comprehensive)

“Social Safety Net for All” to Launch for Small Business Owners Next Year

Business Suspension and Closure Safety Nets, Plus Success Bonuses for Young Entrepreneurs

Up to 1.5 Million Won Childcare Allowance for Solo Proprietors

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The Ministry of SMEs and Startups has announced the implementation of the "Universal Social Safety Net" from next year to ensure that small business owners can also benefit from a social safety net. The ministry plans to introduce measures such as the "Startup Safety Policy Insurance" to support young small business owners throughout their life cycle—from launching a business, to facing crises, and then recovery. It will also introduce new programs like parenting subsidies for one-person small businesses and support for industrial accident insurance premiums.

On September 2, the Ministry of SMEs and Startups held a "Policy Meeting on Establishing a Social Safety Net for Young Small Business Owners" at KT&G Sangsang Planet in Seongdong-gu, Seoul, and announced the above measures.

Second Deputy Minister Lee Byung-gwon stated, "While interest and enthusiasm for startups have been growing recently, many young small business owners typically start their businesses without accumulated capital. Temporary crises often escalate into management crises and may eventually threaten their livelihoods. Therefore, from next year, we will launch new initiatives to strengthen the social safety net for small business owners, while also expanding and supplementing existing support programs."

The ministry presented three main pillars of its "2027 New Social Safety Net Policy Direction": the "Youth Startup and Challenge Safety Net" to support the entrepreneurial aspirations and challenges of young people; the "Life Safety Net" to support health, care, and parenting needs; and the "Social Insurance Safety Net" to respond to business closure or occupational accidents. These policy tools are tailored to small business owners, who often cannot access benefits such as unemployment benefits, occupational accident insurance, or parental leave.

Lee Byungkwon, Second Vice Minister of the Ministry of SMEs and Startups, is listening to cases of startup and management difficulties faced by young small business owners at the "Policy Meeting for Establishing a Social Safety Net for Young Small Business Owners" held on the 2nd at KT&G Sangsang Planet in Seongdong-gu, Seoul. Ministry of SMEs and Startups

Starting next year, a new "Youth Safety Policy Insurance" will be introduced to help prevent business closures among young entrepreneurs. In cases of business suspension or closure, it will provide support for re-employment or another business attempt. Those who successfully manage their businesses will receive encouragement payments to help strengthen their business resilience. For small business owners with less than five years in operation, encouragement payments will be provided when they reach three, five, or seven years in business, and accumulated savings will be paid at maturity. If a business is suspended, fixed costs such as rent and labor costs will be supported at a standard of 100,000 won per day for up to three months. If a business closes, up to 20 million won will be paid in a lump sum to cover costs for re-startup, rent, and employee wages.

A ministry official explained, "This insurance is the first of its kind introduced by the ministry and will support 48,000 people, guaranteeing coverage for three stages: business suspension, closure, and business success."

The new plan also includes a newly established industrial accident insurance support program and expanded employment insurance support, aiming to reduce the burden of insurance premiums for small business owners. The industrial accident insurance premium support program will offer support for up to 70% of monthly premiums, and employment insurance premiums will be subsidized by up to 80% over five years. For those forced to close their businesses involuntarily, unemployment benefits will be provided for up to seven months, and recovery and leave allowances will be newly available for small business owners who suffer occupational accidents. Currently, the employment insurance enrollment rate for self-employed individuals remains at 1%, while industrial accident insurance is about 0.9%. The goal is to encourage small business owners to enroll in these insurance programs and facilitate their entry into formal social support systems.

To prevent the loss of income or business closure among small business owners due to health problems, the ministry will also provide health care support funds. For small business owners eligible for national health check-ups, up to 100,000 won will be offered to compensate for business suspension or to hire temporary workers during the checkup period.

A new parenting support grant for one-person small business owners will also be introduced. For single-person self-employed individuals who meet the revenue requirements and take parental leave, 1.5 million won will be provided over three months—the same amount as the current maternity leave benefit (a total of 1.5 million won for three months). Currently, the support that small business owners receive during maternity leave is only a quarter of what employees receive.

To strengthen the retirement safety net, the ministry will improve the operation of the Yellow Umbrella Mutual Aid Fund. The deductible income brackets will be expanded, allowing members to receive income deductions ranging from 2 million won to 6 million won across five brackets. The potential expansion of restricted business types for enrolment is also under consideration. The ministry plans to refine the detailed support measures and implementation strategies based on field feedback and will fully launch related programs starting next year.

Young entrepreneurs and small business owners participating in the meeting welcomed the introduction of the social safety net but also voiced the need for increased support. One female small business owner commented, "The expansion of the parenting support grant will be very helpful, and I am even considering having a second child, hoping the benefits will be further expanded in the future. However, the amount is still lower than the wage for part-time workers, so I hope the grant amount can be increased."

Lee Younggeun, Head of Seoul Creative Economy Innovation Center, said, "It is essential to support young small business owners so they can overcome challenges such as income disruption and debt-related stress. Statistically, the success and survival rates for re-challenging entrepreneurs are high. I believe the key is to establish a robust system that enables them to start again as the safety net expands."

Second Deputy Minister Lee Byung-gwon also remarked, "The budget allocated for the small business safety net was actually less than initially planned, but if these policies prove effective, even larger-scale budgets may be allocated in the year after next."

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