Economy rides semiconductor boom, but young Koreans drown in debt

20s and 30s account for 30.4% of all personal rehabilitation filings from January to July

Youth debt restructuring cases top 31,590 in first half; average debt per person in their 30s up 6.9% in a year

South Korea's economy is forecast to grow around 3 percent this year on the back of a semiconductor boom, but young people are finding their finances increasingly strained. Nearly 30,000 people in their 20s and 30s have filed for personal rehabilitation so far this year, and more than 30,000 young borrowers have received debt restructuring. Analysts say the benefits of economic growth have yet to reach youth employment and incomes, leaving a significant number of young Koreans surviving on debt.

Moon Jin-seog, a Democratic Party of Korea lawmaker on the National Assembly's fiscal and economic planning committee, obtained data Thursday from the Court Administration Office showing that 96,722 people filed for personal rehabilitation from January through July this year. That figure represents 64.9 percent of the 149,112 people who filed for the full year last year.

Personal rehabilitation is a court-supervised debt-relief system that allows borrowers with a steady income who cannot repay debts under normal circumstances to have those obligations restructured with judicial approval.

By age group, 7,909 filers were in their 20s and 21,484 were in their 30s. Combined, the two groups totaled 29,393, accounting for 30.4 percent of all filers — meaning roughly one in three personal rehabilitation applicants was between 20 and 39 years old.

The share held by people in their 20s and 30s was slightly lower than last year. In all of last year, 13,685 people in their 20s and 34,235 in their 30s filed for personal rehabilitation, for a combined total of 47,920 — or 32.1 percent of all filers.

The number of young people receiving debt restructuring through the Credit Counseling and Recovery Service and similar bodies also rose. In the first half of this year, 97,199 debt restructuring cases were finalized. Of those, 10,442 involved people in their 20s or younger and 21,148 involved people in their 30s, putting the combined youth total at 31,590 — or 32.5 percent of all finalized cases.

The total debt carried by those in their 20s and 30s came to 1.44 trillion won ($1.06 billion). Borrowers in their 20s or younger held a combined 315.6 billion won, while those in their 30s held 1.12 trillion won. Average debt per person stood at 30.22 million won and 52.95 million won, respectively.

Both the number of young people receiving debt restructuring and the scale of their debt increased. Compared with the first half of last year, finalized cases rose 2.6 percent for those in their 20s or younger — from 10,182 to 10,442 — and 7.5 percent for those in their 30s, from 19,670 to 21,148.

Total debt over the same period also grew. Borrowers in their 20s or younger saw their combined obligations rise from 301.9 billion won to 315.6 billion won, while those in their 30s went from 974.1 billion won to 1.12 trillion won. Average debt per person climbed 1.9 percent for those in their 20s or younger, from 29.65 million won to 30.22 million won, and 6.9 percent for those in their 30s, from 49.52 million won to 52.95 million won.

Even as economic indicators improve on the strength of semiconductor exports, analysts say young people's ability to repay debt is weakening as youth employment remains sluggish and incomes stagnate. Experts are calling for a proactive safety net to support young debtors before delinquencies drag them into personal rehabilitation proceedings.

"Economic indicators have improved thanks to the semiconductor boom, but young people are still getting by on debt," Moon said. "We need a safety net that catches young people before they fall into delinquency, so that the benefits of growth can reach them too."

attom@heraldcorp.com