Difficulty in Reemployment Leads to Low-Profit Subsistence Self-Employment
"Small-Scale Self-Employed in Their 60s and 70s Are Effectively the Extremely Poor"
About half of business owners aged 50 and over who switched from wage employment to self-employment were found to have monthly incomes below the minimum wage.
On the 23rd, the Korea Employment Information Service announced this through the report titled “Elderly Self-Employment Transition and Low-Wage Labor,” which analyzed data from the 1st (2006) to the 18th (2022) waves of the Korea Welfare Panel.
According to surveys from the 1st to the 17th waves, 58.8% (269 people) of those who had been wage workers for more than a year and were engaged in self-employment in the 18th wave in 2022 were aged 50 or older.
In particular, ‘subsistence self-employed’ in the distribution service and consumer service sectors accounted for more than half, at 53.8%. The report analyzed, “Since it is difficult for elderly people who have left jobs to find reemployment, they can easily start a business but tend to engage in subsistence service industries with low added value and profitability.”
Furthermore, among business owners aged 50 and over, 83.4% maintained their self-employment without any employees. This was higher than the 75.6% proportion of self-employed without employees among all self-employed individuals.
Regarding income, elderly people who had been in self-employment for a long time (with shorter wage employment periods) and those who had worked as wage employees for a long time until just before entering self-employment had somewhat higher business incomes.
The average monthly income of elderly self-employed individuals whose wage employment period before starting a business was 1 to 3 years was 3,387,000 KRW, the highest. Those with 16 to 17 years of wage employment followed with 3,337,000 KRW. However, these amounts did not reach the average wage of regular employees over the past three months, which was 3,796,000 KRW.
The monthly income of elderly self-employed individuals with 7 to 9 years of wage employment before starting a business was only 2,029,000 KRW. For those with 10 to 12 years, it was just 1,886,000 KRW, the lowest.
The report pointed out, “These results indicate that self-employment cannot be regarded as a good job that can replace wage employment, nor can wage employment experience be seen as helpful to the economic performance of self-employment.”
Additionally, an average of 48.8% of elderly self-employed individuals were found to have incomes below the monthly minimum wage. The net income of elderly people who started businesses without prior experience in the same industry as their current self-employment was 1,443,000 KRW, and the low-wage employment rate was also high at 82.9%.
Moreover, the net income of subsistence self-employed individuals was 2,252,000 KRW, while that of non-subsistence self-employed individuals was 3,432,000 KRW, showing a difference of about 1.2 million KRW.
The net business income of self-employed individuals without employees was 2,276,000 KRW, less than half of those with employees (5,419,000 KRW). This is interpreted as meaning that low business income makes it difficult to hire workers, and running the business alone makes it hard to generate operating profits.
By age group, the income of those in their 50s was 3,802,000 KRW. For those aged 60 and over, it was lower at 1,431,000 KRW, with a low-wage employment rate of 75.8%. In particular, the proportion of small-scale self-employed in their 60s was 61.1%, and it soared to 89.7% for those aged 70 and over.
The report pointed out, “Self-employed individuals in their 60s and 70s are effectively an extremely poor class with incomes far below the minimum wage.”
It added, “Although they engage in self-employment for their livelihood, support measures are needed to improve the economic performance of self-employed individuals who cannot even earn the monthly minimum wage.”
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