240,000 Young People in Poverty, a Record High... Rapid Increase in Multiple Debtors in Their 20s

Basic Livelihood Security Recipients Among Youth Increased 46-52% Compared to 160,000 at End of Lee Myung-bak and Park Geun-hye Administrations
Multiple Debtors in Their 20s Rose 21% from End of 2019 to Last Year

[Asia Economy Reporters Sim Nayoung and Jang Sehee] "As soon as I was able to make a living, the support was cut off, making it difficult to maintain my life. I have to return to society in four months, but I have no money and nowhere to stay. What should I do?"

Kim Seungho (27, pseudonym), who served in the military after being a basic livelihood security recipient for six years, spoke with difficulty. Born into a difficult family, he faced severe financial hardship when he could no longer work part-time due to the COVID-19 pandemic. It was hard to maintain a stable life with government support alone, so he worked part-time. However, if his income exceeded a certain level, government support was reduced. It was ultimately a zero-sum game. Kim said, "Without stable income, I sometimes had to borrow money, and some months I was left with only 5,000 won."

According to data submitted by the Ministry of Health and Welfare to Jeong Chunsook, a member of the National Assembly’s Health and Welfare Committee from the Democratic Party, as of February, the number of young basic livelihood security recipients aged 20 to 39 reached a record high of 244,864. With a total of about 2.37 million recipients, one in ten is a young person.

Compared to 160,756 in February 2013 at the end of Lee Myung-bak’s administration and 166,874 in February 2017 at the end of Park Geun-hye’s administration, the number of young basic livelihood security recipients increased by 52.3% and 46.7%, respectively.

The increase in recipients is due to the youth employment market slump and factors such as the relaxation of the support obligation criteria in October last year. Individuals are classified as basic livelihood security recipients if they receive even one of the livelihood, medical, education, or housing benefits.

A Ministry of Health and Welfare official explained, "It appears that the abolition of the support obligation criteria and the deterioration of the youth employment market have had a combined effect," adding, "Among youths, the proportion receiving housing benefits is higher compared to other benefits."

Choi Hyunsoo, head of the Social Security Finance Policy Research Office at the Korea Institute for Health and Social Affairs, said, "The employment market instability during the COVID-19 crisis likely had an even greater impact on young people entering the market for the first time," and emphasized, "If not addressed early, they may remain in this state, so policy support is needed to help them escape it initially."

During the COVID-19 period, the number of multi-debtors in their 20s (those who borrowed money from three or more financial institutions) increased overwhelmingly compared to other age groups.

According to the "Number of Multi-Debtors by Generation" submitted by the Financial Supervisory Service and the Bank of Korea to Yoon Changhyun, a member of the People Power Party in the National Assembly, the number of multi-debtors in their 20s increased by 21% from the end of 2019 to the end of 2021 (302,582 → 366,369).

At the beginning of the COVID-19 crisis, stock prices plummeted, and people in their 20s borrowed money to rush into the stock and coin markets. As central banks worldwide injected liquidity, the market overheated further. The bubble did not last long. From the second half of last year, it burst, leaving people in their 20s in despair. With interest rates rising sharply, their debt burden is increasing.

Since people in their 20s are generally before starting full-fledged social life, their income levels are low. The likelihood of multi-debtors in their 20s becoming credit delinquents is higher than in other age groups. Their worsening economic capacity is pointed out as a factor threatening the nation's sustainability, calling for countermeasures.

Yoon, a standing member of the Presidential Transition Committee’s Planning Division, said, "The debt backlash has begun for those in their 20s who engaged in ‘Yeongkkeul’ (borrowing to invest) and ‘Bittou’ (debt-financed investment)," and added, "Risk management measures such as youth-tailored debt restructuring plans should be prepared in anticipation of the interest rate hike period."

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