Monday, November 29

Young people suffering the most ‘economic pain’ of all time

‘Unemployment, closure, and debt’ triple high due to Corona
Economic distress index 27.2, the highest since counting

A job seeker is looking at job information posted at an employment welfare center in Seoul. / Reporter Kim Chang-gil

The economic pain experienced by young people (15-29 years old) amid the worsening economic situation and the difficulty in finding employment due to the prolonged COVID-19 was the worst in history, a survey result showed.

According to the results of the calculation of the emotional economic pain index by generation in the first half of this year, announced by the Korea Economic Research Institute (Hankyungyeon) under the Federation of Korean Industries on the 14th, the economic pain index for the youth was 27.2, the highest since the count in 2015.

The economic distress index is an index that measures the quality of economic life of the people by adding the inflation rate and the unemployment rate at a specific point in time. The perceived economic pain index by generation is calculated by adding the inflation rate by age group to the perceived unemployment rate by age group.

The emotional economic distress index of other age groups also recorded the highest level in the first half of this year, followed by those in their 60s (18.8), 50s (14.0), 30s (13.6), and 40s (11.5).

Provided by Korea Economic Research Institute

Provided by Korea Economic Research Institute

The employment cold wave, which has worsened since COVID-19, has been cited as the main cause.

The youth unemployment rate was 25.4% as of the first half of this year, 2.2 times that of those in their 30s (11.7%) and 2.6 times that of those in their 40s (9.8%). The youth unemployment rate rose from 22.9% in 2019, before the outbreak of COVID-19, to 25.4% in the first half of 2021, a 2.5 percentage point increase in 2 years and 6 months. The rising inflation has also added to the economic pain of the youth. The youth inflation rate has remained in the 0% range since 1.6% in 2018, but soared to 1.8% in the first half of 2021.

As the unemployment crisis continues, more young people are turning to start-ups, but the situation is not easy for young self-employed people.

The rate of closure of individual entrepreneurs under the age of 29 was 20.1% as of 2020, 1.6 times the overall average (12.3%). The closure rate of young individual entrepreneurs rose by 0.3 percentage points from 5 years ago (19.8% in 2015), making it the only deterioration among all age groups. During the same period, the closure rates for all other age groups decreased.

Han Kyung-yeon pointed out, “If young people in the early stages of their working life fail to enter high-quality jobs and become frustrated after starting small business, they may not be able to accumulate adequate labor experience and thus may have difficulty settling down in the labor market in the future.”

Provided by Korea Economic Research Institute

Provided by Korea Economic Research Institute

An increase in youth debt and worsened financial soundness were also analyzed as factors that aggravated the economic pain.

The debt-to-asset ratio of young people (heads of households under the age of 29) was 32.5% as of 2020, the highest among all age groups. The youth debt ratio was 16.8% in 2015, the second lowest after ’60 years and older’ (13.4%), but it continued to rise starting in 2017 (24.2%) and reached the highest level.

The rate of increase in debt among young people was much faster than the rate of increase in assets. The youth debt increased by an average of 18.5% per year from 14.91 million won in 2015 to 34.79 million won in 2020, while assets increased only 3.9% per year from 88.64 million won to 107.2 million won. From 2015 to 2020, net assets minus liabilities were found to decrease by 1.32 million won among all age groups. On the other hand, it was found that, during the same period, net assets of other age groups increased from a minimum of 60.48 million won to a maximum of 18.92 million won.

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