Posted December. 26, 2012 03:13,
Two years ago, Kim Ho-yoon, 61, a resident of Suwon, Gyeonggi Province, began driving a cab for a taxi company. Having retired from a large company eight years ago, he had more than 500 million won (465,766 U.S. dollars) in cash reserves but lost a bundle due to failed attempts at running a convenience store and restaurant.
Now, all Kim has is an apartment of 109 square meters worth 300 million won (279,459 dollars). He said he hopes to maintain an accident-free driving record through next year and get an independent driver`s license by taking out a home equity loan.
"I have to keep working to support my son, who`s preparing for a civil service exam," he said, adding, "Individual taxi drivers earn just a bit over 2 million won (1,863 dollars) a month. I`ll have to struggle to repay my debt over the next 10 years."
Korea has the world`s fastest aging population, and more elderly are unable to sufficiently earn a living. The poverty ratio among senior citizens in the country leads member states of the Organization for Economic Cooperation and Development. Many elderly are starting their own businesses to earn money but the spending capacity of those over age 60 is steadily declining.
According to Statistics Korea`s study of non-wage workers this year released Tuesday, the number of self-employed aged 60 and over reached 1.438 million in August, up 5.5 percent or 75,000 people from 1.36 million year-on-year. This is higher than the rate for those in 30s (4.5 percent) and 50s (3.5 percent).
Those aged 60 and over account for 24.8 percent of the self-employed in Korea, meaning a fourth of the self-employed are aged 60 or over. Starting from 22.1 percent in 2007, the share has increased by 0.1 to 0.4 percentage points per year, reaching 24 percent last year. Worse, only 10.2 percent (147,000 people) of these self-employed had one or more employees.
Senior citizens are trying to earn income by starting their own businesses, but their spending capacity has declined. According to a Statistics Korea survey of household trends, the average consumption propensity of urban households with two or more members and headed by people aged 60 or older was 69.4 percent in the third quarter this year, the lowest since 66.7 percent in the third quarter of 1997.
The average propensity to consume is the portion of income spent on consumption. The disposable income of those aged 60 or older rose 40.5 percent to 2.36 million won (2,198 dollars) this year from 1.68 million won (1,564 dollars) in 2002. Over the same period, their consumption spending rose just 20.6 percent to 1.64 million won (1,527 dollars) from 1.36 million won (1,266 dollars). Falling housing prices and record-high household debts are forcing these people to close their wallets.