Debt and job insecurity drive Korean youth toward crime

Rising living costs, high housing prices, and a weak job market are leaving young Koreans in debt as young people take their first steps into society. By the end of June, the average household loan delinquency rate for people in their 20s at the five largest banks reached 0.41 percent, the highest among all age groups. At one major bank, the July delinquency rate for unsecured loans among borrowers under 20 was 0.8 percent, more than double the rate for those in their 30s to 50s. Nearly 50,000 young people were more than six months behind on student loan repayments, with total overdue loans exceeding 250 billion won.

The number of young people labeled as “credit caution” borrowers, formerly known as defaulters, after failing to repay loans for more than three months is also rising sharply. As of July last year, 66,000 people in their 20s were registered as credit caution borrowers, a 25.3 percent increase from two and a half years earlier. During the same period, the total number of credit caution borrowers increased by only 8 percent, meaning young people are defaulting three times faster. Many of them, shut out from formal financial channels, turn to illegal private lenders to cover urgent expenses.

The recent surge in kidnappings and detentions of Koreans in Cambodia partly stems from the desire of some young people to make quick money. But it also reflects how easily desperate youth fall for the lure of high-paying jobs after repeated employment failures. Some reportedly chose to travel to Cambodia under promises of debt forgiveness. Insecure employment and income, soaring housing and living costs, and growing debt create an environment that makes young people more susceptible to criminal temptations.

To help young people trapped by these pressures, the government must provide targeted support, including debt restructuring and credit rehabilitation. Fundamentally, regulations that restrict corporate investment and hiring should be eased to create more quality jobs. Youth who have lost hope must not be left to become a “reserve force for crime.”