K-Herald

Productive 40-Somethings Start to Feel the Pinch

by 조선편집국 posted Nov 30, 2016

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Even people in their 40s at the height of their productive lives are starting to feel the pinch.

According to Statistics Korea on Sunday, the average monthly income of households led by breadwinners in their 40s declined declined 0.03 percentage points for the first time ever in the third quarter of this year to W5.05 million (US$1=W1,170).

Until the second quarter of 2015, the income of that group rose a healthy five percent a quarter on average. But growth slowed to 1.6 percent in the fourth quarter last year and to 0.2 percent during the second quarter of this year.

A weak economy and low interest rates were the major culprits. As the slump drags on, the average monthly income of self-employed people plunged 5.9 percent to W978,000, and interest income fell to a record-low W5,759 a month, compared to W10,900 a year ago.

The decline was largely offset by earned income, which accounts for 72 percent of incomes and rose 2.9 percent to W3.65 million.

But the growth of earned income also slowed compared to the previous average of more than five percent, mainly because employers froze salaries amid global economic uncertainties.

The decline is startling because even during the global financial crisis in 2008-2009, households led by breadwinners in their 40s were able to increase their income. As a result, consumers in their 40s continued spending even as people in their 20s and 30s were struggling to find jobs and the older generation tightened purse strings as they braced for retirement.

Shrinking incomes are expected to lead to a decline in private consumption, further exacerbating economic woes.