South Korea Faces Rising Economic Risk from Aging Self-Employed Population (Image supported by ChatGPT)
SEOUL, May 16 (Korea Bizwire) — South Korea’s rapidly increasing number of elderly self-employed workers—driven by baby boomer retirements and limited reemployment options—is emerging as a structural risk to the country’s financial stability and long-term economic growth, the Bank of Korea (BOK) said in a joint report with the Korea Development Institute (KDI) on Thursday.
Released during a policy symposium in Seoul, the report warned that older self-employed workers are flooding low-barrier industries with limited profitability, high debt ratios, and low productivity—making them especially vulnerable to economic shocks.
The findings come amid broader concerns that the country’s high self-employment rate—23.2% as of 2023, according to OECD data—is far above the OECD average of 16.6%, trailing only a few smaller economies. While self-employment in advanced economies tends to decline as formal wage jobs expand, South Korea remains an outlier.
A major reason, the BOK said, is the influx of baby boomers entering self-employment post-retirement. Since 2015, when the first-wave baby boomers (born 1955–1963) reached the legal retirement age of 60, the number of self-employed seniors has surged from 1.42 million to 2.1 million in 2024.
That number is expected to rise to 2.48 million by 2032, when the larger second-wave baby boomer generation (born 1964–1974) retires.
As of 2024, people aged 60 and over accounted for 37.1% of all self-employed workers, a trend that the BOK says is economically precarious.
Older entrepreneurs are often concentrated in low-entry sectors such as transportation, retail, and food service, where competition is fierce and margins thin. Many have limited preparation and lack the skills or capital to build sustainable businesses.
South Korea’s elderly population is grappling with insufficient pension income. (Image courtesy of Yonhap)
A 2022 government survey showed that seniors had an average startup preparation period of just nine months, and nearly 35% of newly self-employed individuals in their 60s earned less than ₩10 million ($7,200) in annual profits.
In terms of labor productivity, their average per-person revenue was only ₩30 million ($21,500)—far below that of their younger counterparts.
From 2014 to 2024, 470,000 more elderly individuals became self-employed (excluding agriculture, forestry, and fisheries), with 290,000 entering sectors that require little specialized knowledge.
The BOK concluded that the growing senior self-employment trend not only undermines household financial health but could also weaken overall macroeconomic resilience. In 2024, 65.7% of senior self-employed workers were in sectors deemed “vulnerable” to economic downturns.
To mitigate these risks, the BOK called for structural labor reforms, including post-retirement rehiring programs tied to wage system revisions, large-scale job creation in the service sector, and policies to match retiring seniors with labor-short small businesses in regional areas.
“The key is to help older workers stay in stable wage jobs for longer,” the BOK stated. “Without intervention, the shift to self-employment could deepen socioeconomic vulnerabilities and erode the foundations of sustainable growth.”
M. H. Lee (mhlee@koreabizwire.com)
