A growing number of Korean baby boomers who have retired from their main lifetime jobs are starting up microenterprises to earn a livelihood. But they are exposing themselves to the risk of poverty as their chances of success are low due to their lack of experience and unfavorable economic conditions.
In Korea, baby boomers refer to people born between 1955, two years after a truce agreement ended the Korean War, and 1963, the year when the nation began to implement a strict birth control program. The number of baby boomers is estimated at 7.1 million, or 14.6 percent of the nation’s total population.
The retirement of the baby boomer generation started last year with those born in 1955 reaching many firms’ mandatory retirement age of 55. This year, some 320,000 baby boomers are expected to leave work. From 2014, baby boomer retirees will outnumber university graduates.
A large proportion of these retirees seek post-retirement reemployment to make a living, given that they have not accumulated enough wealth to lead a comfortable life after retirement and the government’s social security support for old-age income is far from adequate.
But amid a tight job market and slowing economic growth, decent jobs available for these retired middle-aged people are few and far between. Hence they are compelled to start up a business to create jobs for themselves and make money to cover living expenses.
According to a report released by the state-run Korea Labor Institute, retired baby boomers are competitively jumping on the startup bandwagon. Most of them set up microenterprises ― businesses with fewer than five employees, often no employees other than the self-employed owner.
In the first half of this year, some 54,000 people in their 50s went into business on their own account, with a large majority starting up microenterprises. As a result, people in their 50s came to account for 55.7 percent of the nation’s entire microenterprise operators, up from 53.7 percent in December last year.
Most of these petty businesses are engaged in the wholesale/retail, hotel/restaurant, construction and personal services industries, areas that do not require highly specialized skills or large startup funds.
But these sectors are also marked by high bankruptcy ratios. The average survival ratio of subsistence businesses in the hotel/restaurant sector is known to be around 30 percent.
Hence the concentration of retired baby boomers in these crowded sectors is a cause for concern. If they fail in their new ventures, they could end up in poverty. Given their large number, their collective impoverishment could become a serious social problem.
In this respect, it is necessary for the government to come up with a support program tailored to the needs of these baby boomers. They need training and guidance from the initial stages because they lack the skills necessary to start up and operate a business. The need for such a program is all the greater as more baby boomers will retire going forward.
At the same time, it is also necessary for the government to help retiring baby boomers to start up technology-based new businesses, which have a much higher chance of success and contributing to job creation.