$40,000 club matters, but fix youth unemployment first

Korea’s per capita gross national income (GNI) is poised to exceed $40,000 this year. Corporate earnings have risen sharply on the semiconductor boom, while the won’s recent appreciation has provided another boost. Unless an unexpected economic shock or renewed exchange-rate surge occurs during the remainder of the year, Korea is likely to enter the $40,000 era.

As of last year, only five countries with populations exceeding 50 million had per capita GNI above $40,000: the United States, Germany, Britain, France and Italy. For Korea, which spent 12 years in the $30,000 range, crossing the threshold would be a meaningful sign that its economy has reached the scale of a fully developed country.

But joining the “$40,000 club” is no cause for unqualified celebration. Growth is increasingly concentrated in semiconductors, meaning rising income is not spreading evenly through the economy. Semiconductor exporters are enjoying extraordinary growth while domestic demand is contracting, creating a stark divide. Strong headline growth figures therefore coexist with widespread frustration: When will ordinary people feel even the tail end of the boom?

Young people, in particular, see little sign of improvement. In July, employment among those aged 15 to 29 fell by 191,362 from a year earlier. Young workers were hit especially hard in industries highly exposed to AI, including information and communications and professional, scientific and technical services.

Another troubling finding emerged this week: One in two unemployed young people suffers psychological burnout from career uncertainty and other pressures. The Federation of Korean Industries (FKI) analyzed microdata from the Office for Government Policy Coordination’s “2024 Survey on the Lives of Young People” and found that 52.7 percent of unemployed youths had experienced burnout. Among those searching for work for more than a year, the rate rose to 61.8 percent.

As the FKI recommends, Korea should strengthen subsidies for companies providing vocational training, giving employers greater incentives to participate and making training more closely connected to actual workplaces. In 2024, workplace-based programs accounted for just 1.5 percent of total vocational training expenditure in Korea, compared with an Organisation for Economic Cooperation and Development average of 11.7 percent.

Above all, policymakers must stick to basic economic principles and avoid measures that inevitably hurt youth employment. A uniform extension of the mandatory retirement age is one such antiyouth policy. Reaching $40,000 in per capita income will be an important milestone, but that number will mean far less if younger Koreans cannot find jobs or share in the prosperity behind it.