"MZ Generation Income, Assets, Debt, and Consumption More Vulnerable Than Previous Generations"

The Bank of Korea: "Policy Efforts Needed for Income Growth and Debt Reduction"

On the 24th, a notice related to loans is posted in front of a commercial bank in Gangnam-gu, Seoul, where the government has eased jeonse loan regulations for genuine demand from low-income households but plans to introduce strong supplementary measures for household debt, such as increasing the installment repayment ratio. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Seo So-jeong] The MZ generation (born 1980?1995) has emerged as the main force in economic activities such as consumption, but their income, assets, debt, and consumption are weaker compared to previous generations, raising concerns about potential negative impacts on the economy in the future.

On the 15th, the Bank of Korea stated in its report "Status and Characteristics of the MZ Generation" (BOK Issue Note) that "The MZ generation is expected to constitute the largest proportion of the Korean population for a considerable period, but their economic situation is more vulnerable than that of Generation X (born 1965?1979) and the Baby Boomer generation (born 1955?1964)."

The Millennial generation (M generation) refers to those born between 1980 and 1994, and Generation Z refers to those born after 1995. Since Generation Z, excluding those born in 1995, cannot be said to have full-fledged income and consumption, this study included only those born in 1995 and collectively referred to them as the MZ generation.

According to the report, as of 2018, the annual total income of the MZ generation age group (based on married male household heads in regular employment) was about 1.5 times that of the same age group in 2000 (born 1962?1977). Earned income, which accounts for about 90% of total income, increased relatively significantly for the MZ generation age group in 2018 compared to the same age group in 2000 (about 1.4 times), but the increase was smaller than that of Generation X (about 1.5 times) and the Baby Boomer generation (about 1.6 times).

In particular, the earned income of the MZ generation age group was only about 1.07 times that of the same age group in 2010, after the global financial crisis, which was lower than Generation X (about 1.08 times) and the Baby Boomer generation (about 1.2 times) in 2018. Choi Young-jun, a research fellow at the Micro-Institutional Research Office of the Bank of Korea Economic Research Institute, explained, "This can be interpreted as the MZ generation being the most affected by the global financial crisis compared to the Baby Boomer and Generation X generations."

Financial assets of the MZ generation increased by about 1.3 times compared to the same age group in 2012, but when viewed over the entire period (2001?2018), they remained almost stagnant. This is because it was difficult for the MZ generation age group to accumulate seed money for financial assets due to employment difficulties.

The total debt of the MZ generation age group also increased significantly to about 4.3 times that of the same age group in 2000, due to increased borrowing from financial institutions for housing purposes. This level is much higher than that of Generation X (2.4 times) and the Baby Boomer generation (1.8 times) in 2018.

Furthermore, total consumption of the MZ generation age group has remained almost stagnant compared to the same age group since the 2008 global financial crisis, and their propensity to consume has also declined.

Research fellow Choi emphasized, "It is necessary to continuously examine the impact of the MZ generation’s lifestyle and preferences on the economy and to make policy efforts to increase income and reduce debt."

This content was produced with the assistance of AI translation services.