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Low Interest Rates Change Habits Of Many, Especially Older Koreans

Mar 28,2001
Because of interest rates that have declined to the 5-6 percent range, people are gradually changing their earning, saving and buying patterns.

A golf course manager in Yong-in, Kyonggi province said, "As the snow melts away, the gray-haired people are disappearing likewise." He said senior citizens used to make up about a third of his regular customers. "I think they have their retirement money in banks and are staying away now because interest is their only source of income," he said.

Lower interest rates and slack stock markets are also compelling workers to be more satisfied with their jobs and eager to secure steady incomes. "Employee loyalty has been remarkably noticeable recently," said a personnel department executive at a large conglomerate. "After the foreign currency crisis, many workers left the company to join high-tech start-ups, but with that fever dying out and interest rates declining, they want more stable jobs with reliable salaries."

He added that the company bumped up starting times by 30 minutes - to 8:30 a.m. - this month, and almost everybody comes to work on time.

Shunning the sluggish bond and stock markets, banks are beginning to compete by marketing low-interest loans to their individual customers.

Salaried workers, instead of putting their paychecks into savings accounts, which they used to do when double-digit rates were the norm, are taking the loans to buy cars, houses or consumer goods which they can pay back over time.

Many housewives are using their wits to make up the drop-off in interest earnings from their husbands' retirement allowances. As it is difficult for middle-aged men who have been laid off to find new jobs, their wives are doing what they can to pay the bills, including taking temporary jobs as housekeeping or childcare services.

Others are motivated by their lower interest incomes to withdraw their principal and start their own businesses.

Many retired people have decided to set up small shops, often in partnerships with close friends or relatives. "I had retirement allowances and savings of 250 million won ($191,500) in a bank," one man said, "but after the decreases in interest rates I couldn't even afford tuition for my children's schooling, so I decided to open my own business."


by Oh Jung-hee




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