Young are worse off than generations before them

A young customer receives help at a bank in central Seoul [NEWS1]

Today's younger generation is enjoying slower growth in incomes, owns fewer financial assets and carries more debt than the generation that preceded them.

People between the ages of 24 and 39 earn incomes that are 1.4 times the amount earned by people the same age in 2000, according to Bank of Korea on Tuesday. The study was based on male householders with regular jobs.

That increase was smaller than the 1.5 times growth in incomes enjoyed by Generation X -- born between 1965 and 1979 -- compared to their predecessors, and the 1.6 times growth enjoyed by Generation BB, born between 1955 and 1964.

The world “faced low growth following the 2008 global financial meltdown,” said Choi Young-jun, who led the research by the Bank of Korea released on Tuesday. “The growth of earned income by millennials and Generation Z declined compared to the previous generations as the amount of salaries of university graduates that got jobs right after the crisis was substantially reduced.”

Millennials refer to people born between 1980 and 1994. Generation Z refers to people born after that.

Their economic situations are more “vulnerable” than their predecessors', according to the report.

The research was conducted as millennials and Generation Z become the major consumers driving the economy. They accounted for 46.9 percent of the population as of 2020.

Following the 2008 global financial meltdown, the younger generation had to take out more loans to buy a home because housing prices spiked.

Total debt held by millennials and Generation Z in 2018 was 4.3 times higher than people in the same age group in 2000. Total debt held by Generation X in 2018 was 2.4 times higher than the people of the same age group in 2000, and 1.8 times higher for the BB Generation.

The central bank noted that the debt was mostly for buying a residence.

Consumption by the younger generation also shrunk following the global financial meltdown.

Consumption by millennials and Generation Z in 2017 jumped 1.3 times compared to the same age group in 2000. But it hardly increased compared to the same age group in 2008, the year of the global financial meltdown.

Financial assets owned by millennials and Generation Z in 2018 were only 1.3 times higher than the same age group in 2012.

“Millennials and Generation Z likely could not easily save seed money due to the difficulties of getting a job. But their savings slightly increased from 2012 as they deposited cash in their bank accounts” to earn interest, read the report.

“The vulnerable economic conditions faced by millennials and Generation Z could have a negative impact on the economy in the future. So it is important for authorities to review their livings, income growth and debt reduction to improve their economic conditions through policies.”

BY JIN MIN-JI [jin.minji@joongang.co.kr]