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Young household heads spend more on food, housing

South Korean household heads in their 20s and 30s spent more on food and housing in 2016 than six years ago as their wages remained stagnant amid soaring home prices, data showed Wednesday.

According to the data by Statistics Korea, those household heads forked out nearly 23.8 percent of their monthly expenditures worth 2.58 million won to pay for food and housing last year. The figure was up 1.2 percentage points from 2008, when the global financial crisis broke out.

(Yonhap)
(Yonhap)

Comparable figures were 21.6 percent for household heads in their 40s, 23 percent for those in their 50s and 33.7 percent for people in their 60s or older.

The upturn in "essential spending" by 20- and 30-something household heads was attributed to a relatively low increase in their income over the cited period.

The monthly average income of those household heads stood at .46 million won ($3,970) last year, up 27.6 percent from six years earlier.

Comparable growth rates were 35.2 percent for household heads in their 40s, 35.5 percent for people in their 50s and 34.7 percent in their 60s or older.

Also responsible was the fact that household heads in their 20s and 30s had to spend more on housing because of their low home ownership compared with older generations. Many young household heads rent homes on a monthly basis or through the "jeonse" system.

Jeonse is a home rental system unique to South Korea, where tenants pay a large sum of money as a deposit instead of paying monthly fees. Landlords profit off of the large deposits before returning the entire initial amount when the rental contract expires.

Since the global financial crisis, jeonse and monthly home rental fees have soared amid a low-rate period, inflicting a big financial burden on them.

"Income and consumption expenditures of people in their 20s and 30s have not increased so much as the country's unfavorable labor market conditions have lead to their delayed employment," said Kim Kwang-seok, who teaches at Hanyang University in Seoul. "Despite their stagnant income, those people can't cut back on their spending on food and housing." (Yonhap)

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