Low-income households struggle with heavy debt

Debt held by income earners in the bottom 20 percent grew much faster than that of top income earners over the past year, data showed Thursday. In the same period, 14. 9 percent of the total population made less than the country’s median income, up 0.1 percentage points.

Income earners in the top 20 percent made 5.76 times more in equivalized disposable income than the bottom 20 percent income group, compared to the previous year’s 5.83. Equivalized disposable income refers to total income after tax and other deductions available for spending or saving, representing the purchasing power of a household.

According to a study by Statistics Korea, the Bank of Korea and the Financial Supervisory Services of the country’s household finances and welfare as measured by income, debt and after-retirement spending relative to the country’s five income brackets, the first quintile had 20.04 million won ($15,109) in debt, up 22.7 percent from 16.33 million won a year earlier.

Their debt grew 22.7 percent as of March from a year earlier, whereas the top 20 percent earners’ debt growth averaged 0.4 percent.

Those in the second and third quintiles saw their debt decrease by 3.7 percent and 3 percent, respectively. Debts held by people in the fourth quintile inched up by 0.3 percent.

Similarly, temporary workers and day laborers saw their debts inch up to 35.33 million won, rising 2.6 percent from 34.44 million won a year earlier.

By contrast, self-employed households had an average of 120.97 million won in debt, and the figure for regular workers came to 113.6 million won, down 2.3 percent and 0.8, respectively, from a year earlier.

The income of the fifth quintile group averaged 155.98 million won, up 3.8 percent. The figure for the first quintile group came to 14.5 million won, up 4.3 percent.

Their respective equivalized disposable incomes came to 77.22 million won and 13.4 million won.

A separate study by the Seoul Metropolitan Government showed more than half of young adults in Seoul were in a state of poverty, as measured by the asset poverty rate which averaged 55.6 percent.

The study of 5,083 respondents aged between 19 and 36 showed that 55.6 percent of them had less than the median of three months’ disposable income, meaning they possessed less than 3.96 million won in assets. The median monthly disposable income was 1.32 million won.

The asset poverty rate of single households was 62.7 percent, 7.1 percentage points higher than the total.

A total of 27.7 percent of respondents said they did not have enough money to cover living expenses.

Of them, about 41 percent said they received money from their parents, whereas 17.7 percent said they had to dip into savings.

About half, or 47.5 percent, said they lived with their parents, followed by 34.4 percent who lived alone.

Around 65 percent said they had a job. About 25.6 percent were the so-called NEET, an acronym forf Not in Education, Employment or Training. Some 34.7 percent of the respondents said they suffered from depression.

The respondents’ life satisfaction, as measured by 13 indicators including living standards, health, achievements and safety, averaged 5.9 points.