The number of self-employed people over 50 reached a record 3.1 million in October, as baby boomers who have just started retiring opened their own small business to make a living. The number crossed the 3 million mark for the first time in May this year.
After a temporary decline, the total number of self-employed people in all age groups bounced back, and the proportion of people over 50 is increasing. The total number of self-employed people stood at 6 million in 2007. It fell to 5.6 million in 2010 in the wake of the global financial crisis but rose to 5.73 million by the end of October this year.
Self-employed over-50s mostly work in the wholesale/retail, transport and hospitality business. In other words they have small shops, restaurants and motels or drive taxis. The number of people in their 50s who opened new restaurants or motels increased by about 2,000 to 6,000 on-year in the last few months.
Since April, the number of over-50s in wholesale and retail also rose by 30,000 to 40,000 on-year. The figure for those over 60 has grown by about 10,000 since the second half of this year.
The problem is that these attempts have a very low success rate. Many older people fail in business when they jump on certain bandwagons like coffee shops or convenience stores without making proper preparations.
According to a recent report by KB Research, Korea's coffee shop market is worth W2.8 trillion (US$1=W1,141) this year, more than double what it was in 2006, but the number of coffee shops nationwide increased six-fold from 1,500 to 9,400 over the period, diminishing returns for all but the most competitive.
According to 2009 data from Statistics Korea's, small-scale businesses with fewer than four staff accounted for a whopping 90 percent of all wholesale/retail, transport, restaurant, and hospitality businesses, which many people feel they can get into without much difficulty. But this huge proportion of mom-and-pop operations means it is difficult to improve the country's overall competitiveness, especially when so many older people are trying to feed themselves by opening a corner shop.
"The ratio of self-employment to GDP stood at 25.8 percent in Korea as of 2008, which is vastly more than in the U.S. (5.8 percent) and Japan (9.8 percent)," said Hwang Soo-kyung of the Korea Development Institute. "We need to find more fundamental ways to create a business environment where older people can stay in their jobs."