Expecting a peak, Korean workers in their 40s instead find a sharp decline

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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.
 
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.
 
“Your forties are the time when you can earn the highest income, but they’re also an age when it’s easy to feel anxious,” Kim said. “It feels like your growth within the company has reached a certain limit, and at times it seems as though all that’s left is a downward path.”
 
Kim's situation isn't unique.
 
The share of employed people in their 40s fell to 21.2 percent in November — 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. 
 
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 — all in an effort to secure both their family’s 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.
 
The eligibility age for voluntary retirement — under which employees leave their jobs in exchange for severance packages tied to years of service — 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.
 
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.
 
 

Office workers head to workplace in central Seoul on Jan. 31. [NEWS1]

 
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.
 
“In the past, a key responsibility of managers was to gather and interpret information to support decision-making,” said Kim Yong-jin, business professor at Sogang University. “But with AI taking over many of these tasks, a single middle manager can now oversee more employees, making managers less important from the company’s perspective.”
 
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.
 
“Under such a corporate system, employees who fail to reach management are effectively forced out of their jobs,” 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’t make the cut are often pushed out.
 
For example, the average age of Hyundai Motor Group’s first-time executives entered their 40s for the first time, accounting for 49 percent — more than double from 2020's percentage — of the latest annual reshuffle this year. Similarly, 64 percent of newly appointed executives at SK Group were also those in their 40s. Korea's seniority-based promotion system further places employees in their 40s at risk, as they have increasingly become the new 50s in corporate structures. 
 
Another driver of this trend is the country's aging population.
 
As what Korea terms the “second baby boomer” generation — those born between 1964 and 1974 and now largely in their 50s — nears the official retirement age, the generation that follows is naturally smaller.   
 
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.
 
“Korea’s 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,” said Heo Jun-su, a professor who teaches at the Department of Social Welfare at Soongsil University. “The system spans from the 40s through the 50s and 60s, but it starts with those in their 40s,” he added while noting that the official retirement age is 60.
 

 
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.
 
“Since our child was born, I’ve been scaling back on other spending as spending on the baby has increased,” said a 40-year-old IT worker surnamed Shin, also a father of a one-year-old. “I’ve cut back on dining out and leisure activities.” Shin said that his industry in particular presents further challenges that contribute to their feeling of instability. “The prevalence of AI usage at the workplace has definitely reduced job opportunities for people working in the IT industry,” he explained, adding that the retirement age also often is not clear for IT developers.
 
Consumption by household heads in their 40s grew a mere 1.4 percent in the third quarter — 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 non-farming and non-forestry households with two or more members.
 

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Overall anxiety has even pushed this group to cut back on their children’s education expenses—often considered a last resort.
 
Expenditures on education by a couple with an unmarried child totaled 413,000 won ($288.13) in 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. 
 
“People in their 40s are usually at their peak earning years, but with the number of employed workers declining, there’s simply no income to spend,” said Kim Sang-bong, an economics professor at Hansung University. “You can’t expect other age groups to fill the gap as the population is shrinking. This trend will keep domestic demand weak — a problem that can only be addressed by creating more jobs.”
 
 
 

BY JIN MIN-JI [jin.minji@joongang.co.kr]