Young Koreans in greater debt while income is no less different from 20 yrs ago

South Koreans aged from teen to 30s are more indebted despite stagnated income in comparison with the contemporaries of near two decades ago.

According to the Bank of Korea on Tuesday, married salaried workers born from 1980 to 1995 aged between 23 and 38 in 2018, made 1.4 times more income than the same category in the year of 2000.

The income growth was slower for them than elder generations.

Those born from 1965 to 1979 (Generation X), aged between 39 to 53 by 2018, earned 1.5 times versus the same age group of 2000. Those born earlier from 1955 to 1964 (baby-boomers), aged from 54 to 63 in 2018, earned 1.6 times more than the comparative group of 2000.

When compared to year of 2010, following the 2007-2008 global financial crisis, millennial Koreans aged from 23 to 38 in 2018 were earning only 1.07 greater income than the corresponding age group in 2000, while Gen Xers made 1.08 times more and baby boomers 1.2 times more.

Meanwhile, personal debts grew faster for millennials than preceding generations. They had 4.3 times greater debt than those Koreans who were aged from 23 to 38 in 2000, or 18 years ago. However, Gen Xers shouldered 2.4 times more debts and baby boomers 1.8 times more than their corresponding age groups did 18 years ago.

Higher debt burdens for millennials than older generation was largely due to high housing costs. In 2018, 34.4 percent of millennials took out a loan to buy a house, which compares to 32.1 percent of Gen Xers and 19.6 percent of baby boomers.

Millennials also were different in investment and spending patterns. They preferred stock investment over exchange traded fund or such indirect investment methods, and spent less money after living through the global financial crisis.

Millennials are emerging as the prime working age population but their financial status is weaker than preceding generations, observed Choi Young-joon, senior researcher at Bank of Korea¡¯s economic research institute, in the study. This could work unfavorably on the country¡¯s economy in the future, warned Choi, adding that continuous monitoring on millennials¡¯ impact on the economy should be made with policy-level efforts made to help boost their income and reduce their debts.

The Korean central bank¡¯s study on millennials is based on income and other financial status of married male household who were born from 1980 to 1995.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]