South Korea’s household debt rose to a record high in the first quarter, although growth slowed slightly.
According to data by the Bank of Korea on Wednesday, the country’s outstanding household debt came to 1,468 trillion won ($1.36 trillion) in the January-March period, up 17.2 trillion won from the previous quarter, KBS reported.
The first quarter figure marks the largest since the central bank began compiling related data in the fourth quarter in 2002. The increase rate of household credit is higher than that of household income, posing a possible threat to the country’s financial security.
However, the quarterly growth decreased from last year’s 28.8 trillion won in the second quarter and 31.4 trillion won in the third quarter.
A BoK official said that the bank is making steady efforts to manage the household loans, but a large supply of new apartments this year may contribute to a further increase in household debt.
Meanwhile, South Korea’s top economic policymaker said Wednesday that the government plans to take a flexible approach to achieving its goal for the minimum wage after carefully looking at the economic impact and reactions from local business owners, Yonhap reported.
The Moon Jae-in administration increased the minimum wage for all workers by 16.4% this year to 7,530 won ($7) from 6,470 won in 2017, after setting a goal of raising hourly pay to at least 10,000 won by 2020.
The government said the hike is aimed at income-led economic expansion and a reduction of the pay gap between workers, but critics argue that the increase is actually hurting entry level jobs and weighing down the local economy.
“I think there is a need for flexibility on reaching (the minimum wage’s) target, taking into consideration the impact and responses from the market and business owners,” Finance Minister Kim Dong-yeon told reporters in Busan. He was speaking on the sidelines of the 53rd annual meeting of the African Development Bank held in the southeastern port city.
“The preliminary study results showed that the hike in the minimum wage didn’t have a statistically significant impact on the job market in the first quarter,” Kim said. “The minimum wage’s effect on employment needs a long-term time series analysis.”
The policymaker said the government also should look into how much the local market and business owners can handle the new wage system.
When asked whether the government can attain its goal of 3% economic growth, Kim said the Korean economy is on the right course so far this year.
