The proportion of self-employed people in South Korea’s workforce is expected to fall below 20 percent this year, amid signs of ballooning credit troubles, a mix that calls for prompt policy measures by the government and financial regulators.

If the trend continues, it will mark the first time that the share of self-employed people in the country falls below 20 percent since authorities began to compile related data in 1963.

According to Statistics Korea, the number of self-employed people is 5.63 million, or 19.7 percent of the 28.54 million who are employed. As the latest figures are based on the monthly average from January to August, the final yearly numbers are forecast to break through the 20 percent mark by year-end.

The overall direction of self-employed data is discouraging. The share of self-employed workers was 37.2 percent in 1963 but steadily declined to come in at 28.8 percent in 1989. Last year, it managed to stay at 20 percent.

Of course, Korea’s self-employed proportion is still high among the Organization for Economic Cooperation and Development member countries. According to the OECD’s estimates, the country’s self-employed workers account for 23.2 percent of the total workforce, the fifth-largest share after Colombia (46.6 percent), Mexico (31.4 percent), Chile (24.5 percent) and Costa Rica (24.4 percent).

Meanwhile, the OECD data shows Canada’s self-employed share at 6.8 percent and Japan’s at 9.5 percent, so there is no question that Korea’s self-employed workers make up a much bigger portion.

The data points to two aspects to consider.

First, a bigger share of self-employed in the workforce means tougher competition among the self-employed, and those workers are much more vulnerable to economic ups and downs compared with those with steady positions employed by companies.

Second, the shrinking proportion of the self-employed workforce in Korea signals that running a small business here has become more difficult, especially in connection with stubbornly high interest rates and inflation -- burdensome costs and market conditions that combine to extend the protracted slump in retail and other sectors closely related to the self-employed.

Some experts speculate that 3 out of 4 small restaurants and accommodations tend to shutter themselves within just five years of their first operations due largely to relentless price and service competition.

The average age of the self-employed is going up at a fast pace in tandem with the rapidly aging demographic trend in Korea, as those self-employed workers must adapt to the latest market trends.

The most challenging burden for the self-employed, particularly those engaged in delivering food via mobile apps, is the steep level of commissions charged by digital platform operators. Aside from delivery costs, small business operators have to pay various online transaction fees, which often carve out a big chunk of their operating revenue.

This is why such workers keep calling on the government to overhaul the delivery and online transaction commissions linked to food order apps operated by big platforms.

Without drastic policy measures, self-employed workers have to confront financial troubles on their own, a tall order considering the unfavorable market conditions. According to the Bank of Korea, some 410,000 self-employed individuals were facing financial difficulties as of the second quarter of this year. Their outstanding total loan balance stood at 121.9 trillion won ($92.2 billion), up 12.8 trillion won from the previous year.

Another indicator of the financial woes faced by the self-employed is changes in credit card lending. Self-employed workers, facing financial difficulties and spurned by banks, tend to resort to credit card loans out of desperation. According to data from the Financial Supervisory Service, the balance on credit cards climbed to 44.66 trillion won as of the end of August, recording the highest amount since 2003. Equally troubling is that the delinquency rate jumped to 3.1 percent, compared with 1.9 percent at the end of 2021.

The government and financial authorities are required to take all possible measures to protect self-employed workers from the vicious trap of debt and to help cash-strapped small business owners, who are an important part of the Korean economy.