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[GETTY IMAGES BANK]<\/p>\n
[BEHIND THE NUMBERS]
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Two months ago, Kim Yong-sik, 45, was urged to resign from his job as a graphic designer. It was his third such forced departure after years of working at a conglomerate and then two startups.
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Now unemployed and getting by on part-time jobs, he has stopped giving his parents a monthly allowance, cut back on dining out and grocery spending and postponed travel plans.
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\u201cYour 40s are the time when you can earn the highest income, but they\u2019re also an age when it\u2019s easy to feel anxious,\u201d Kim said. \u201cIt feels like your growth within the company has reached a certain limit, and at times it seems as though all that\u2019s left is a downward path.\u201d
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Kim’s situation isn’t unique.
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The share of employed people in their 40s fell to 21.2 percent in November \u2014 the lowest percentage for the month since 1995, according to data from the Ministry of Data and Statistics. Their struggle in the job market is slashing their purchasing power, which economists say could prolong the country’s weak domestic demand.\u00a0
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People in their 40s have traditionally been in the prime of their careers, spending heavily to raise children, support aging parents and pay off mortgages \u2014 all in an effort to secure both their family\u2019s future as well as their own retirement. But their standing is being shaken by wider AI usage that is slashing the need for managerial roles as well as growing employment anxiety, dampening their willingness to spend.
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The eligibility age for voluntary retirement \u2014 under which employees leave their jobs in exchange for severance packages tied to years of service \u2014 has been lowered into the 40s at major banks like Shinhan Bank and retailers, including Lotte Wellfood and Korea Seven. In the past, these programs were only available to workers in their 50s.
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The number of people employed in their 40s fell to 6.15 million in November, down 9,000 from a year earlier, according to government data.
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Office workers head to workplace in central Seoul on Jan. 31. [NEWS1]<\/p>\n
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AI and legacy corporate structures
AI has pushed many workers to the margins of employment, a threat that is becoming increasingly pronounced among those in managerial roles as AI takes on more sophisticated tasks.
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\u201cIn the past, a key responsibility of managers was to gather and interpret information to support decision-making,\u201d said Kim Yong-jin, business professor at Sogang University. \u201cBut with AI taking over many of these tasks, a single middle manager can now oversee more employees, making managers less important from the company\u2019s perspective.\u201d
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This phenomenon is particularly evident in Korea, where employees regularly rotate through different roles every few years. Such continuous rotation often pushes them into management positions rather than specialist roles.
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\u201cUnder such a corporate system, employees who fail to reach management are effectively forced out of their jobs,\u201d Kim added, noting that executive promotions, once dominated by those in their 50s, are increasingly going to people in their 40s, and that those in the age bracket who don\u2019t make the cut are often pushed out.
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For example, the average age of Hyundai Motor Group\u2019s first-time executives entered their 40s for the first time, accounting for 49 percent \u2014 more than double from 2020’s percentage \u2014 of the latest annual reshuffle this year. Similarly, 64 percent of newly appointed executives at SK Group were also those in their 40s.\u00a0Korea’s seniority-based promotion system further places employees in their 40s at risk, as they have increasingly become the new 50s in corporate structures.\u00a0
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Another driver of this trend is the country’s aging population.
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As what Korea terms the \u201csecond baby boomer\u201d generation \u2014 those born between 1964 and 1974 and now largely in their 50s \u2014 nears the official retirement age, the generation that follows is naturally smaller.\u00a0\u00a0\u00a0
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The number of people in their 40s fell 10 percent to 7.81 million last year compared to 8.73 million in 2015. In the same period, the population in their 50s and 60s increased by 6 percent and a staggering 57 percent, respectively.
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\u201cKorea\u2019s corporate structure is largely based on seniority, meaning that employees who have been with the company for longer are often the first to be laid off when companies face financial or operational difficulties,\u201d said Heo Jun-su, a professor who teaches at the Department of Social Welfare at Soongsil University. \u201cThe system\u00a0spans from the 40s through the 50s and 60s, but it starts with those in their 40s,\u201d he added while noting that the official retirement age is 60.
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Tightening belts in the face of job insecurity
As confidence in job security weakens, the age group that has traditionally driven consumer spending has started cutting back, especially as inflation persists.
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\u201cSince our child was born, I\u2019ve been scaling back on other spending as spending on the baby has increased,\u201d said a 40-year-old\u00a0information technology (IT) worker surnamed Shin, also a father of a one-year-old. \u201cI\u2019ve cut back on dining out and leisure activities,\u201d Shin said that his industry in particular presents further challenges that contribute to their feeling of instability. \u201cThe prevalence of AI usage at the workplace has definitely reduced job opportunities for people working in the IT industry,\u201d he explained, adding that the retirement age also often is not clear for IT developers.
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Consumption by household heads in their 40s grew a mere 1.4 percent in the third quarter \u2014 far lower than 10.3 percent growth among people aged 39 and below, and the slowest pace of growth since the second quarter of 2023, when it expanded by just 1 percent. Households were categorized as nonfarming and nonforestry households with two or more members.
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Overall anxiety has even pushed this group to cut back on their children\u2019s education expenses\u2014often considered a last resort.
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Expenditures on education by a couple with an unmarried child totaled 413,000 won\u00a0($290)\u00a0in the third quarter, down 0.7 percent on year, according to the data ministry. It was the first time the on-year expense was cut back since the fourth quarter of 2020, when the pandemic outbreak withered spending. Spending on entertainment and culture, including camping products and books, also fell by 9 percent to 275,000 won.\u00a0
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\u201cPeople in their 40s are usually at their peak earning years, but with the number of employed workers declining, there\u2019s simply no income to spend,\u201d said Kim Sang-bong, an economics professor at Hansung University. \u201cYou can\u2019t expect other age groups to fill the gap as the population is shrinking. This trend will keep domestic demand weak \u2014 a problem that can only be addressed by creating more jobs.\u201d <\/p>\n