On the 21st, the People’s Power Inflation and People’s Safety Special Committee announced a financial support plan for the vulnerable, such as the self-employed, small business owners, young people, and ordinary people. The most controversial issue is the content of the youth debt adjustment. This is because the government seems to be bailing out ‘investment failure’ of certain age groups. Criticism is spreading as most media, including conservative media, are publishing editorials that are ‘not fair’.
The debt adjustment program announced by the government targets young people under the age of 34, who are in the bottom 20% of the population. A grace period for repayment of principal and interest of up to 3 years is granted, and the principal and interest can be repaid in equal installments for up to 10 years. Loan interest is reduced by 30-50%. It is a method of adding a youth program to the expedited debt adjustment program operated by the Credit Recovery Commission.
In addition, some media criticized the ‘Youth Tomorrow Savings Account’, which the government had recruited from the 18th. He pointed out that if the target youth’s income rises in the middle, the subscription will be canceled midway. It is said that it does not fit the purpose of the Youth Tomorrow Savings Account, which is aimed at ‘asset formation’.
Chosun Ilbo: “Youth debt relief is not fair”
The media pointed out that the special program could cause ‘unfairness’. Conservative media took the lead. Investment should be an individual responsibility, and the government should not bail out certain classes. Some media also took issue with the ‘procedure’ of the tax reduction policy.
On the day of the announcement, the Chosun Ilbo said in the desk column ‘Youth debt relief, not fair’, “The headwind is strong as investors in virtual assets are included in the bailout.” “This measure breaks the common sense that investment is personal responsibility. It is not fair to burden the financial sector with the failures of some investors. Wouldn’t the value of ‘fairness and common sense’ advocated by President Yoon Seok-yeol during his nomination period be much more valuable than the amount of debt relief for young people, which is said to be about 48,000 people,” he said.
The Dong-A Ilbo pointed to a procedural problem. On the 22nd, in the editorial ‘Controversy over youth debt interest reduction and exemption, clarify the principle of ‘debt investment’, the right authorities should have checked the condition of vulnerable households before the debt bomb exploded. The order is to set up a mid- to long-term plan to induce debts to be paid off, and to arrange bad debts according to the procedure. Nevertheless, the authorities skipped the usual steps and introduced a generous policy of interest reduction for young people and forgiveness of principal for the self-employed. The government’s self-inflicted controversy is hindering the preemptive debt restructuring plan.”
Economic newspapers also criticized it. On the 20th, the Korean economy issued a message in its desk column ‘What is Real Fairness’ that it should care for citizens who silently kept the rules, and on the 15th, the editorial said, “‘Explicit Youth Special Expedited Debt Adjustment’, which reduces the debt of low-credit youth by 30-50% The program is something to consider. If excessive benefits are given to young people who have made excessive investment in coins and stocks just because they are ‘young’, it will only raise doubts as a political decision.”
Chosun ‘Debt relief measures that spread gender conflict’ Hankyoreh ‘Debt reduction misconceptions and truth’
The Chosun Ilbo reported on page 8 of the morning newspaper on the 21st that the ‘gender conflict’ brought about by the debt relief measures. This is because coin and stock investors were mostly male. The Chosun Ilbo cited data from the Financial Services Commission in the article, saying, “As of the second half of last year, 2.18 million or 40% of virtual currency investors (5.58 million) who completed their real name verification were men in their 20s and 30s. There are 900,000 women in the same generation, less than half. Coin investment does not pay any tax unlike stocks that pay taxes on transaction tax and dividend, but there are a lot of people who point out whether there is a need for a bailout. In particular, men in their 20s and 30s tend to show aggressive investment behavior and often have low investment returns. It means that the risk of investment failure is higher than that of women.”
The Hankyoreh pointed out some ‘misunderstandings’ surrounding the ‘debt reduction’ policy. The point is that not only young people can get debt adjustment. On the morning of the 21st, on page 17 of the newspaper, the Hankyoreh said, “The measure the government has mentioned is not a new system, but rather the existing Personal Debt Adjustment System of the Credit Recovery Committee. This system applies to those who have been delinquent for less than 1 month, 1 to 3 months, or more than 3 months who have difficulty repaying their debts.
He continued, “Currently, the personal debt reconciliation system does not specifically consider the use of funds. Rather than classifying whether the debtor invested in stocks and virtual assets with the funds raised through debt, or whether it was used for living expenses, the total amount of debt is put in lumps and debt adjustment is negotiated with financial institutions. It means that even if you are not a young person, even if you have suffered a loss from your investment, you can receive interest reduction and exemption and deferment of principal repayment if you are faced with a situation where it is difficult to repay the debt.
‘Youth Tomorrow Savings Account’ … If I earn more than 200 a month, will I quit midway?
In addition, there is a heated debate about the ‘Youth Tomorrow Savings Account’.
The Youth Tomorrow Savings Account is a wealth formation support project by the Ministry of Health and Welfare that was recruited from the 18th for low-income youth. The goal is to create additional savings up to three times the savings amount. If you save 100,000 won a month, the government will provide an additional 100,000 won a month to support for 3 years. At the maturity of 3 years, you will receive a total of 7.2 million won plus interest on the deposit by adding 3.6 million won to the government subsidy to the 3.6 million won you paid.
However, it is pointed out that the membership requirements are too strict. This is because the upper limit of subscription is 2 million won per month. To maintain the benefits, you must maintain an income of 2 million won per month for 3 years. In an article on the 20th, E-Daily said, “The application for a youth tomorrow savings account, where the government adds 100,000 won to the savings amount, is hot, but there are complaints because of the strict subscription requirements.” “I have to maintain my income, but if I convert the minimum wage (9,160 won) this year alone, I get 1914,400 won a month,” he said.
He added, “This is a policy that supports financial difficulties for young people to raise money and have a stable start to society, but even young people who are receiving the minimum wage can barely meet the membership requirements, raising doubts about the effectiveness of the policy.”