Why one in four Korean workers runs their own business
South Korea's share of self-employed workers is among the highest in the developed world, and it has less to do with entrepreneurial spirit than with what happens to people who leave a salaried job at 50.
South Korea is often described as an economy of giant manufacturers, and by output it is. By headcount it is something else. Statistics Korea counted roughly 5.7 million self-employed people in 2024, and once unpaid family workers in shops and restaurants are added, non-wage workers make up close to a quarter of total employment. The OECD average sits nearer 15 percent, and the figure for the United States is in the single digits. Among high-income members, only a handful of southern European economies come close to Korea’s ratio.
The explanation is not a national appetite for risk. It is the shape of the salaried career. Korean firms still pay largely by seniority, which makes older employees expensive, and the practical consequence is early exit. The statutory retirement age has been 60 since 2016, but Statistics Korea’s supplementary employment surveys have repeatedly found the median age of leaving one’s longest-held job to be around 50. Public pension eligibility, meanwhile, is climbing toward 65 by 2033. That leaves a decade or more with no wage and no pension, and self-employment is what fills it.
What people open is predictable, because the options with the lowest informational barrier are the ones that get chosen. Food service, retail and lodging absorb a large share of new proprietors. Franchising accelerates the process by packaging the decision: the head office supplies branding, fit-out, supply contracts and a revenue projection, and the franchisee supplies the capital and the labour. Fair Trade Commission registry data showed more than 300,000 franchise outlets operating in Korea by 2022, spread across an unusually crowded roster of brands.
The survival statistics are the other half of the story. Statistics Korea’s business demography series has consistently shown that only about a third of newly registered businesses are still operating five years later. In accommodation and food service, the survival rate is worse — closer to one in five. Because entry is easy and exit is common, the sector churns: closures free up premises that are quickly taken by the next entrant working from the same arithmetic, and the population of proprietors stays roughly constant while its membership turns over.
Margins are squeezed from several directions at once. Rent and the key-money payments customary in Korean commercial leases front-load the cost of entry. Card processing fees have been pushed down by regulation for the smallest merchants, but the newer pressure comes from delivery platforms, where a per-order commission is layered on top of a rider fee that both merchant and customer partly bear. Delivery moved from an optional channel to a default one during the pandemic years, which means opting out of the fee structure increasingly means opting out of demand.
The result shows up as debt rather than as failure. Bank of Korea financial stability reports put total borrowing by self-employed households above 1,000 trillion won by 2023, with a substantial share held by borrowers carrying loans from three or more lenders. Pandemic-era deferral and guarantee programmes postponed the reckoning without shrinking the balances, and interest rate increases through 2022 and 2023 raised the carrying cost of the whole stock.
Read this way, Korean self-employment is less a business statistic than a welfare one. A chicken shop opened at 52 is doing the work that unemployment insurance, an occupational pension and an active labour market policy do elsewhere. Successive governments have responded with credit support, fee caps and subsidised closure schemes for those who want to leave the sector, all of which treat the symptom. The underlying condition — a labour market that discharges workers a decade before the pension arrives — is harder to legislate away.