South Korean workers’ average debt reached a new high in 2021, exceeding KRW 50 million ($41,400) for the first time, according to a recent report by Statistics Korea. Although the growth rate of debt slowed compared to the previous year, it was still the largest increase since the agency began tracking wage earners’ debt in 2017.
In December 2021, the average loan for wage earners was KRW 52.2 million ($43,200), up 7.0% or KRW 3.4 million ($2,800) from 2020. The debt growth rate has slowed since its peak in 2020 at 10.3%, due to government efforts to manage household debt and the ultra-low interest rate environment.
Young wage earners under the age of 29 experienced the highest increase in debt among all age groups, with an average debt of KRW 16.91 million ($14,000), a 15.4% increase. Non-housing mortgages, including student loans, rose by 22.8%.
Workers in their 40s had the highest debt at KRW 76.38 million ($63,200), followed by those in their 30s, 50s, and 60s. Lower-income workers experienced higher debt growth rates, with a larger proportion of their loans coming from non-bank sources.
Despite the rising debt levels, the delinquency rate for wage earners dropped to 0.41% in December 2021, the lowest since 2017, thanks to measures such as principal repayment suspension for vulnerable groups and lending to high creditworthy individuals.