LOS ANGELES, California — According to the Institute of International Finance, household debt in South Korea recently reached 104% of its gross domestic product – the highest level among the 36 leading economies in the world. Thus, it is no surprise that the recent South Korean Netflix-hit drama series “Squid Game” not only deals with the topic of debt but also is “a critique of capitalism and inequality.” The show, in which contestants with financial hardship fight in a series of life-and-death games for monetary compensation, “spotlights how South Koreans have extraordinarily high levels of personal debt,” as well as the extreme lengths they go to pay it off. The narrative of “Squid Game” appears to display the extremity of debt in South Korea accurately.
Poverty in South Korea
“The show highlights income disparity in South Korea and features characters often shunned by society and driven into poverty, including North Korean defectors and migrant workers.” In 2021, South Korea had a poverty rate of 17.4 %, which is one of the highest among the countries currently in the Organization for Economic Cooperation and Development (OECD). The country also suffers from one of the widest and fastest-growing income gaps among OECD countries. According to The Conversation, a network of not-for-profit media outlets, “Squid Game” highlights the “toxic combination of unemployment, easy loans and high interest rates” that pushes South Koreans into this poverty and high debt.
Aside from the factors highlighted in the show, “the fast transition into an aged society is a key factor” as well. In 2018, more than half of the country’s elderly population lived in poverty – about three times the OECD average. In 2015, 20.3 % of the population accounted for people 65 and older, and this figure is only growing. According to the Korean newspaper The Korea Herald, South Korean society will eventually become a “superaged” society.
However, the poverty rate for South Korea’s younger population is also steadily increasing, with a 12 % poverty rate among those between the ages of 0 and 17. According to Kim Sang-bong, an economics professor at Hansung University in South Korea, “the latest reading means that a large portion of the population does not have a job that pays them sufficient income,” as South Korea has high employment and low jobless rates. To no surprise, this “data reminded onlookers of […] Squid Game.”
Debt and Loan Sharks
Sometimes South Koreans living in poverty have no option but to contact a loan shark, “an illegally-operating, private money loaner,” to meet their needs and pay their bills. This has resulted in an extremely high rate of household debt as “an underground world of loan sharks and debt collectors fuels an economy of desperation.” However, many of these loan sharks ask for extreme requirements, such as exceedingly high interest rates, and threaten the debtor’s life if they do not meet these requirements. Thus, the life-and-death scenario represented in “Squid Game” is not far from the truth of what some South Koreans face amid poverty. A recent article in a South Korean newspaper was titled “I had to turn off “Squid Game” halfway through because it was too close to my hellish life.”
To make matters worse, South Korea’s household debt has been increasing at the third-fastest rate among all major economies as of 2021 since the COVID-19 pandemic, “soaring real estate prices and last year’s stock market surge have fueled borrowing.” According to Quartz, “small business owners, supported by laughably small government subsidies, are borrowing money at a worrying rate,” which has detrimental effects, such as a record number of suicides.
In the past few months, the crashing stock market and rising real estate prices have only added fuel to the situation. However, “Squid Game hints that individual solutions to poverty and debt are insufficient,” as government support and intervention are lacking. Thankfully, just this June, the South Korean government amended the Act on Registration of Credit Business Etc. And Protection of Finance Users, banning loansharks from collection interest rates higher than 6% per annum.
Previously, loansharks were able to charge interests as high as 24% per annum, making it virtually impossible for borrowers to pay off their debt. Additionally, the amendment will raise the fine for loan sharks to 100 million South Korean won, twice the current amount. Hopefully, this will not only enable South Koreans to pay off their debt to loan sharks but also prevent loan sharks from exploiting the vulnerable through a real-life version of “Squid Game.”
The Beautiful Foundation, which began in 2000, has taken a unique approach to poverty and dept in South Korea. The NGO has made it its mission to make “sharing a part of life for a society thriving together.” Through the voluntary participation of South Koreans in sharing, the organization has managed to spread a philanthropic culture throughout South Korea. One of the many ways the Beautiful Foundation has managed to do so is through its various campaigns, such as the “Inheritance 1% Sharing Campaign.” The goal of this campaign was to make South Koreans realize the impact the smallest amount of sharing can have.
Hopefully, as a result of the government’s efforts on top of those of NGOs such as the Beautiful Foundation, South Koreans no longer need to rely on exploitative loan sharks.
– Lena Maassen