Korean households are suffering from the lack of money to spend, not to mention for money to save. (image: 401(K)2013/flickr)
SEOUL, Korea, Mar 20 (Korea Bizwire) – Among Korean households, there is an increasing number of those who are suffering from the lack of money to spend, not to mention for money to save. The economic burden to the households is not limited to the decline in income and increasing debt. The main cause of the money drought in households is the increase in non-necessity expenditures such as taxes, national pension payments, and other bills even though their income rises.
According to the National Statistical Office, the growth rate of the real disposable income of Korean households marked only 0.6 percent last year. Also, the nominal disposable income rose only 1.9 percent, far below 5 percent on average.
For the last ten years, the growth rate of non-essential expenditures surpassed those of consumption, except in the year of 2005. In 2013, the real consumption expenditures fell 0.4 percent, while the non-essential expenditures rose 1.5 percent.
Also, household savings are drifting downward drastically. According to the Bank of Korea, the saving rate of households and non-profit organizations marked 4.7 percent last year.
Until the 1990s, the household saving rate always overtook the business saving rate. However, the trend overturned in the middle of the 2000s and last year, the business saving rate almost quadrupled over the household saving rate with 18.7 percent.
A researcher at Hyundai Economic Research Institute said, “The business sector keeps increasing savings considering their asset soundness after several restructurings since the financial crisis in 1997. However, the households increased debts following the real estate boom since the 2000s.”
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