But the fall-off-a-cliff character of what has happened with household savings in South Korea strikes many experts as abnormal and worrisome. It is one of several trends suggesting that South Korea, as it wrestles with post-industrial affluence, is a society under extraordinary stress.
South Koreans work more, sleep less and kill themselves at a higher rate than citizens of any other developed country, according to the OECD. They rank first in time spent online and second to last in spending on recreation, and the per capita birthrate scrapes the bottom of world rankings. By 2050, South Korea will be the most aged society in the world, narrowly edging out Japan, according to the OECD.
At the same time, South Korea ranks first in per capita spending on private education, which includes home tutors, cram sessions and English-language courses at home and abroad.
This data came to light earlier in the month, and was reported in the Chosun Ilbo, Korea Times, and Korea Herald. From the latter:
Korean households had the highest level of saving among the OECD member in 1999. Their saving ratio - saving as a percentage of disposable income - stood at around 25 percent at that time but it dropped to 10.7 percent in 2000, 4.4 percent in 2005 and 2.8 percent last year.
On the contrary, Americans are saving an increasingly large portion of their income. U.S. household savings once dipped to negative 0.4 percent in 2005, which means they spent more than they earned. The ratio came in at 1.8 percent in 2008, and is expected to rise to 5.4 percent in 2009 and 6.5 percent in 2010.
5 comments:
"...work more, sleep less...kill" yourself and pay more for a cram school education!
Sounds like a slogan South Koreans can be proud of!
I'm somewhat surprised. I was always assumed Koreans were really good at saving. Historically, that was at least the case.
Although with the amount they spend on private education that is not surprising. Living in an affluent city like Bundang I can how even the wealthier Koreans seem to spend it all away. I see more designer brands like Louie Vuittan here than in Canada it seems. The high use of plastic surgery can't be light on the wallet either.
I think the lower savings is a recent trend, but I would have to find some data to verify that.
I think the astronomically high cost of housing is a big part of that, although in some ways that becomes a substitute for savings since it is still capital (but less liquid). I could be wrong, though, about that being a major factor in this change.
"I think the lower savings is a recent trend, but I would have to find some data to verify that."
Kush,
Are you doubting the veracity of the OECD's numbers?
This is not a new trend, but an old trend brought into the open with more affluence. Koreans have to have something bigger, better, and newer than the next Korean. Now they have the money to do it. I think everyone knows at least one Korean with an expensive German sportscar, but does not own his own apartment and has no money to speak of.
Are you doubting the veracity of the OECD's numbers?
How does what I said contradict what was written about the OECD? In Korea's post-war economy, this is a recent trend.
In the 2000s = "recent"
Before the 2000s = not so "recent"
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