by Andrea Ferrario

The youth unemployment rate is estimated to be around 30 per cent. Those left without assistance are excluded from a system that primarily rewards inheritance. Debt has become a "structural condition" for access to education, employment, and housing. When banks close their doors, many end up in the hands of loan sharks. The result is a growing human cost in terms of suicides and malaise.

Milan (AsiaNews) – In South Korea, social mobility is an echo from a distant past. What might seem like a simple passing of the baton between generations hides a gridlocked social order in which inherited privilege has replaced merit, aided by policies that protect wealth and facilitate access to credit by the rich.

As a result, in this society, individual destiny is decided primarily at birth and in which initial social position tends to crystallise, limiting the breadth of possible trajectories.

The most significant gap concerns those born around 1990, children of the second wave of South Korean baby boomers. Unlike the previous generation, whose members were able to build independent careers during the global trade boom, young people who started entering  the labour market in 2015 found themselves facing the peak of what economists have called the "employment cliff".

The raising of the retirement age to 60 in 2016 prompted large companies and public institutions to halt new hiring, while deindustrialisation and the persistence of a dual labour market have made stable, well-paid jobs increasingly rare. Some analyses place real youth unemployment rate above 30 per cent.

The income gap clearly shows how concentrated wealth has become. Among those in their 50s, the top fifth own more than 50 times more than those in the bottom fifth, and among those over sixty, the ratio is seventy times greater.

The most significant data emerge among people in their 20s, a group whose incomes are relatively similar but where the wealth gap is enormous. The richest group owns almost 40 times more than the poorest, and this disparity is largely due to family transfers.

Those from wealthy families get a flat, the support needed for private education, and career opportunities, while those who leave without support are excluded from a system that primarily rewards inheritance.

The evolution of the real estate market has further tightened this structure. In Seoul, prices have risen to the point of making purchases impractical for those with average incomes, and the jeonse system, which requires a very large deposit, has widened the gap between those who can rely on their parents' capital and those who have no guarantees.

Public policies have not reversed this trend, as interventions designed to curb speculation have merely slowed transactions without achieving a real cut in prices. This has created a market that preserves existing assets, increasingly raising the threshold for young people to access the real estate market.

Debt as a structural condition

This trend in real estate is intertwined with a broader phenomenon. Private debt has ceased to be an occasional financial instrument, becoming instead a structural condition for access to education, employment, and housing.

South Korean household debt has reached its highest level ever recorded, equivalent to 91 per cent of gross domestic product, compared to the developed-country average of 68 per cent. The ratio of debt to annual income for an individual South Korean is more than double that of France.

For 20-year-olds, the situation is even worst, with average debt well exceeding half of annual income. These figures show a generation accumulating debt before even entering the labour market. In fact, the insolvency rate is highest among 20-year-olds, and over 60,000 young people are now chronically in default, putting them at risk of being pushed into illegal lending.

Building a competitive resume consumes an average of 440,000 won per month (about US$ 300), and nearly half of graduates seeking employment attend private courses to obtain language certifications or gain experience useful for job selection. More 70 per cent say they feel financially pressured to make these investments, often covered by loans.

This process is a vicious cycle, because to aspire to stable employment, one must accumulate credentials, but this path generates debt that makes it even more necessary to secure a job, which is becoming increasingly hard to find as large companies reduce hiring of inexperienced staff.

When banks close their doors, many young people end up in the hands of loan sharks. Approximately 10 per cent of 20- and 30-year-olds have already resorted to illegal loans, a percentage that continues to rise.

Online portals like Daechulnara are supposed to function as platforms where those in need receive offers from registered lenders, but in practice, the first to respond are illegal operators, offering annual interest rates exceeding 3,000 per cent compared to the legal limit of 20 per cent.

Scams based on the theft of personal data, widespread in South Korea, have further exacerbated the situation, dragging many victims deeper into the spiral of debt.

The most extreme case of this trend became public in August 2025, when scores of young South Koreans were repatriated from Cambodia in handcuffs. They had been lured by offers promising high salaries for IT jobs, but once they arrived, they were forced to participate in online scams and subjected to physical and psychological abuse. Thus, they were victimised twice over: first by an economic system that had driven them to desperation, and then by criminal networks that turned that very vulnerability into a trap.

The silent erosion of the Korean miracle

Economic pressure translates into a growing human cost. In 2024, nearly 15,000 suicides were reported in South Korea, making suicide the leading cause of death among people under 50.

The country continues to have one of the highest suicide rates among OECD members, and signs of distress are also evident in terms of mental health, with a sharp increase in depressive disorders and a growing number of young people visiting emergency rooms because of self-harm.

At the same time, the share of young people completely withdrawing from economic and social life is growing. Hundreds of thousands of people under 30 are inactive, neither employed nor in education, and many say they simply stopped after encountering a hostile labour market.

The promise that education would guarantee mobility has been shattered, because a significant portion of these inactive people have a university degree.

The contradiction is evident because, while overall employment improves and some sectors grow, large companies continue to favour already experienced profiles and invest in automation and artificial intelligence, further reducing room for those who should be entering the workforce now.

This group of young people is exposed to three crises that tend to manifest themselves separately elsewhere, but which overlap in South Korea.

On the one hand, they must contend with pressures like those found in Europe, i.e. a rigid labour market based on seniority combined with high youth unemployment and increasingly fragile pension systems.

At the same time, they are subject to trends also found in the United States. As artificial intelligence is beginning to devalue many specialised skills, the wage advantage associated with a college degree is diminishing.

All this is compounded by the inequality typical of emerging economies, where family wealth and networks of connections determine access to employment with an almost feudal logic.

The result is a society that continues to measure success through macroeconomic indicators while simultaneously seeing the social fabric crumble and become increasingly weak. Debt is the thread holding together this contradiction, which has now become unsustainable.

South Korea has fuelled its expansion by shifting all the costs of social reproduction onto individuals and families, turning debt into a permanent feature of daily existence.

The South Korean development model thus appears to be an experiment in growth devoid of inclusion, in which economic excellence coexists with mass exclusion and in which an entire generation remains trapped between the need to borrow to get ahead and the concrete impossibility of freeing themselves from debt.

• south korea
• economics
• debt
• unemployment cliff
• young graduates
• artificial intelligence
• suicides