A local employment center in Seoul (Image courtesy of Yonhap)
SEJONG, Nov. 27 (Korea Bizwire) – South Koreans experience their largest per-capita financial deficit of 40.78 million won at age 17 and reach their maximum surplus of 17.53 million won at age 43, according to new government data. Labor income begins declining after peaking at 43, leading to a return to deficit spending at age 61.
Statistics Korea released these findings on November 26 as part of its “2022 National Transfer Accounts,” which tracks economic resource flows between age groups by examining the relationship between consumption and labor income across life cycles.
The nation’s total consumption in 2022 reached 1,364.1 trillion won, marking a 9.9% increase from the previous year. Public consumption rose by 8.4%, while private consumption grew by 10.6%. Within these categories, public health spending increased by 8.6%, and private education spending saw a notable 12.2% rise.
Labor income grew by 6.3% to 1,168.7 trillion won. The life-cycle deficit – the difference between consumption and labor income – widened by 53.7 trillion won to reach 195.4 trillion won, as consumption growth outpaced labor income gains.
By age group, the young (0-14 years) and elderly (65 and over) populations recorded deficits of 176.8 trillion won and 162.5 trillion won respectively, while the working-age population (15-64 years) generated a surplus of 143.9 trillion won.
The individual life-cycle pattern shows Koreans remaining in deficit until age 28, maintaining a surplus through age 60, and returning to deficit at 61. The significant deficits in youth and elderly populations are partly attributed to education expenses for the young and healthcare costs for the elderly.
Per capita consumption peaks at 41.13 million won at age 17. Labor income gradually increases after 17, reaching its maximum of 42.9 million won at age 43 before declining. This creates the largest individual deficit of 40.78 million won at age 17 and the highest surplus of 17.53 million won at age 43.
Compared to 2021, when the maximum deficit was 37.58 million won at age 17 and the peak surplus was 18.23 million won at age 46, the deficit has widened while the surplus has decreased.
Since 2010, the age of entering surplus has remained steady at 27-28 years, while the age of returning to deficit has gradually increased from 56 (2010) to 61 (2022). Statistics Korea attributes this trend to delayed retirement and an increasing number of elderly individuals continuing to work after retirement age.
These life-cycle deficits are offset through household transfers and public transfers from the government. In 2022, the working-age population transferred a net 298.1 trillion won, with 177.4 trillion won going to the young and 118 trillion won to the elderly.
Statistics Korea also announced improvements to its accounting methods and basic data, applying the 2020 GDP revision results. The agency expanded education consumption statistics to include all age groups, rather than just school-age individuals (0-33 years), and provided more detailed age breakdowns to improve statistical utility.
M. H. Lee (mhlee@koreabizwire.com)
