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70% of new hires at smaller firms age 40 or older: report

By Yoon Min-sik

Published : April 22, 2024 - 14:14

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About 70 percent of those newly hired by small and medium-sized enterprises here are aged at least 40, government data showed Monday, highlighting the younger population’s tendency to avoid smaller companies and the country's overall rapid aging.

Of the 25.3 million people newly hired by the small and medium-sized companies in South Korea in 2023, 7.8 million were in their 20s or 30s. Those in their 20s accounted for 13.5 percent of new hires, while those in their 30s took up 17.4 percent.

The data showed that 24 percent of all new employees at SMEs were aged 60 or above, followed by 50-somethings (23.8 percent) and 40-somethings (21.3 percent).

Korean law defines SMEs by several criteria, including the number of employees. For example, companies in manufacturing, mining, transportation, construction or retailing that have under 300 employees are categorized as either small or medium-sized companies.

Compared to two decades ago, the number of older employees working at SMEs has grown while the number of younger employees has shrunk.

In 2003, 20.5 percent of the new hires were in their 20s while 27.2 percent were in their 30s. The number of 60-somethings accounted for only 10.3 percent, while 14.6 percent were in their 40s.

The change appears largely due to a decline in the youth population, which is being fueled further by South Korea's rapidly dropping total fertility rate, which fell to 0.72 for 2023.

A January report by the Ministry of the Interior and Safety showed that the number of South Koreans in their 70s surpassed that of 20-somethings for the first time ever in 2023, with the average age of the population increasing by 0.6 from the year before to mark 44.8.

A separate Statistics Korea report in January showed that in the manufacturing sector, the number of employees aged 60 or older surpassed the number of employees aged between 15 and 20 in 2023, which also marked the first time ever since the government started keeping an official tally.

But such low number of young SME employees was not solely due to the general population growing older.

Monday's report showed that 46.6 percent of the new hires at large corporations were younger than 40. The figure marked a substantial decrease from 62.8 percent in 2003, but the larger companies still had a far greater percentage of younger employees than the smaller ones did.

Specifically, 15.7 percent of the new employees at large enterprises were in their 20s while 30.9 percent were in their 30s. Only 4.7 percent were in their 60s, while 21 percent were in their 50s.

Large corporations are defined as those with market capitalization of 5 trillion won ($3.6 billion) or above. Companies below that threshold that are not defined as small or medium-sized firms are categorized as "middle market enterprises," according to the official government translation.

South Koreans generally prefer to work at large corporations over SMEs, due to higher wages and better welfare benefits.

An August survey by job search sites Job Korea and Albamon of 1,278 job seekers showed that 43.9 percent of the respondents picked their dream workplace to be Samsung Electronics, the flagship company of Samsung Group and the largest firm in the country by market capitalization.