The start of Koreans’ ‘life in the black’ has been delayed again to 28 years old. Due to the lack of quality jobs that young people want, the age at which they begin to earn a living has been delayed. On the other hand, the labor income of the elderly has increased significantly, delaying the return to a ‘life of deficit’.
According to the national transfer account published by Statistics Korea on the 26th, as of 2022, Koreans will have a surplus (1.28 million won) for the first time at the age of 28. This means that there is no or little income (labor income) until the age of 27, and only after the age of 28 do you start earning more money than you spend.
The age at which life cycle surplus begins was 28 years old from 2017 to 2020, but was brought forward to 27 years old in 2021. The delay in starting a profitable life again after a year is interpreted as a result of the lack of high-wage jobs for young people. In fact, the time it takes for young people aged 15 to 29 from graduation to their first job has reached an all-time high every year, reaching 11.5 months in May this year.
On the other hand, as the elderly’s participation in the labor market becomes more active, the age at which surplus is maintained has been postponed from 59 in 2021 to 60 in 2022. Consumption is supported through labor income until the age of 60. From the age of 61, consumption exceeded labor income and the country re-entered the deficit. The age of re-entry into the deficit was 56 years old in 2013, but it is gradually being delayed as the number of elderly people receiving salaries increases.
Looking at the life cycle per person, there was a deficit until the age of 27, then a surplus from the age of 28 to 60, and then a deficit again after the age of 61. The biggest deficit in my life was when I was 17 years old, and it was minus 40.78 million won. This is because per capita consumption (41.13 million won) is the largest in this age group, and most of it appears to be expenditure on education expenses such as academy fees. The largest surplus was at age 43, when income was 17.53 million won more than consumption. At the
In 2021, the maximum deficit was 37.58 million won (17 years old) and the maximum surplus was 18.23 million won (46 years old). Over the past year, the deficit has increased and the surplus has decreased.
Deficits that occur during each life cycle are made up through asset income (asset reallocation), pocket money and living expenses exchanged between parents and children (intra-household transfers), and government cash support or pensions (public transfers). For the elderly aged 65 or older, the largest portion of the deficit was covered by public transfers such as pensions, totaling KRW 98.2 trillion, followed by asset reallocation (KRW 48.3 trillion). An official from the National Statistical Office said, “For those over 65, they continued to consume as their pensions increased and the price of their homes rose. “Labor income has also increased in this age group,” he explained.
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What challenges do young South Koreans face in achieving financial independence according to Dr. Lee?
Interview between Time.news Editor and Economic Expert
Editor: Welcome to Time.news! Today, we have with us Dr. Lee Hyun-woo, an expert in labor economics and social policy, to discuss a recent report from Statistics Korea on the changing economic landscape for South Koreans. Dr. Lee, thanks for joining us!
Dr. Lee: Thank you for having me! It’s a pleasure to discuss this pressing issue.
Editor: The report highlights that Koreans now begin to see a “life in the black” at age 28. What does this mean in terms of economic pressure on younger generations?
Dr. Lee: That’s a great question. The age of financial independence being pushed back indicates that many young Koreans are struggling to find decent, quality employment after graduation. Factors like high competition for jobs and the rising number of degrees held by graduates are leading to significantly longer job search periods – the average now sits at about 11.5 months, which is quite concerning.
Editor: So, it’s almost a rite of passage now to start a professional career later in life. What do you think are the implications of this delay on young people’s mental health and long-term financial planning?
Dr. Lee: Absolutely, the psychological impact can be profound. Prolonged job searches may lead to feelings of inadequacy or frustration. Moreover, financial planning takes a hit as savings and investments are postponed, which can affect their ability to purchase homes or start families—especially in a society where such milestones are culturally significant.
Editor: On the flip side, the report mentions that the age at which people begin facing a deficit has also been pushed back, to 61. How can we reconcile this with the delayed start for younger workers?
Dr. Lee: It shows a fundamental shift in the labor market. As older individuals remain active in the workforce longer, they sustain their consumption through earned income. This not only extends their working life but also changes the dynamics of public spending, as they rely less on pensions. Ultimately, this might create pressures on systems designed to support older populations.
Editor: Speaking of public support, the data highlights substantial contributions from pensions and other transfers for the older population. How sustainable are these systems given the demographic changes?
Dr. Lee: That’s a critical concern. As longevity increases, the burden on pension systems grows heavier. We need to rethink how public transfers are structured and how we encourage older individuals to remain active participants in the economy. This means adapting our policies to not only encourage job creation for the young but also support the elderly effectively.
Editor: Are there any policy measures you believe could address the issues faced by both young and older demographics in South Korea?
Dr. Lee: Definitely. First, there should be a focus on creating more high-quality job opportunities for young people, perhaps by incentivizing industries that can provide these jobs. Additionally, training programs for older workers could help them upgrade skills and remain competitive. Lastly, intergenerational policies that foster mutual support between younger and older generations could promote economic stability.
Editor: Very insightful, Dr. Lee! As we wrap up, what do you believe is the most important takeaway from the recent data published about Korea’s economic future?
Dr. Lee: The most crucial takeaway is that we need a comprehensive approach that addresses the challenges faced by both ends of the age spectrum. The economic lifecycle has become increasingly complex, and without strategic interventions, we risk exacerbating the difficulties faced by younger generations while also failing to support our aging population effectively.
Editor: Thank you, Dr. Lee, for sharing your insights today. It’s clear that understanding and addressing these economic shifts is vital for South Korea’s future prosperity.
Dr. Lee: Thank you for having me! I hope our discussion encourages more awareness and action regarding these important issues.