SOUTH KOREA Seoul, 11.3% of young people trapped by debt

The plague is fueled by fierce competition in the job market. Many sought to make a fortune by investing borrowed money in the stock market or in cryptocurrencies; but with the collapse of prices they have lost everything. Today, nearly 20% of bankruptcy petitions filed with the court are for people under the age of 30.

Seoul () – For the young generations, South Korea is not an easy country at all. Not only from the labor point of view, since few (and large) companies are willing to pay their employees well, while many small and medium-sized companies cannot. The financial situation of youth has also become increasingly precarious.

As some South Korean television series report, private debt is a widespread problem in the country. As reported by the Bank of Korea last month, there are 381,000 households at risk of insolvency for excessive debts incurred. It is a situation that today affects 3.2% of households. According to the definition of the Central Bank, these are people who could not repay their loans even if they sold all their assets. However, the number of people whose debt levels have reached critical levels is much higher.

Even more so, debt is an everyday concern for South Koreans in their 20s and 30s. According to the newspaper Hankyorehabout 11.3% of this generation has debt problems that tend to drag on over the years, with serious repercussions in terms of socioeconomic status.

The tendency of young people to take on debt is objectionable because it is a gamble, but in the South Korean context there are deep-seated factors that push in this direction. The main factor is an extremely fierce and competitive labor market, in which the “losers” run the risk of finding only low-paid jobs, thus ending up in job insecurity.

Many young people try to solve their situation by resorting to the Stock Market and cryptocurrencies. But since they lack capital to invest, choose to borrow, especially in recent years. At the end of 2020, some 319,000 people under the age of 30 had borrowed from more than three financial institutions to invest in shares, a figure that increased to 387,000 last June. This 21% increase, compared to a 5% increase in the same period for the other age groups, reveals that it was mainly the young who believed in the phenomenon of debt-based investing.

While between 2020 and 2021 the stock market saw positive activity and cryptocurrencies continued to gain momentum, in 2022 these trends were reversed and many young people lost everything. The KOSPI (an index of the Seoul Stock Exchange) lost about a third of its value from its peak in the summer of 2021. The drop mainly affected 20-somethings and 30-somethings, who make up 41% of stock investors. of the KOSPI. Worse was the case for those who invested in cryptocurrencies, who recorded much larger losses.

According to data from the Seoul Bankruptcy Court, cases of bankrupt people in their 20s and 30s have increased rapidly this year. Currently, those under 30 represent 19.6% of bankruptcy filings, but just two years ago, in 2020, their share was 10.7%.