Small Business Startups Surge Among Older Koreans
The number of S. Koreans over the age of 50 who are self-employed jumped to a record 3.1 million in October, reports Chosun Ilbo. The trend is attributed to retired baby boomers opening small businesses to augment their retirement incomes.
The number of people over 50 who own their own businesses passed 3 million for the first time in May. The number of self-employed people in S. Korea is recovering from a temporary decline due to the financial crisis. The total self-employed people had declined from 6 million in 2007 to 5.6 million in 2010 but rebounded to 5.73 million by the end of October.
The self-employed aged over-50 tend to operate small shops, restaurants and motels or drive taxis. In recent months about 2,000 people in their 50s started restaurants or motels, increasing the total to 6,000.
Since April those aged over 50 in wholesale and retail also rose by 30,000 to 40,000 over the past year. The figure for those over 60 has grew about 10,000 since the second half of this year. The failure rate is high among older entrepreneurs who try to tap into trends like coffee shops or convenience stores without sufficient experience or training.
The total revenues of Korea’s coffee shops or cafés is estimated at W2.8 trillion ($2.5 bil.) this year, more than twice the value in 2006. But the number of coffee shops jumped from 1,500 to 9,400 during the period, ensuring poor profitability for most, according to data by KB Research.
Small businesses with fewer than four staff accounted for 90% of S. Korea’s wholesale/retail, transport, restaurant, and hospitality businesses in 2009, according to Statistics Korea. This high concentration of small businesses is seen as reducing the overall competitiveness of the nation’s economy.
“The ratio of self-employment to GDP stood at 25.8% in Korea as of 2008, which is vastly more than in the U.S. (5.8%) and Japan (9.8%),” 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.”