Broadcast on the Netflix platform, the South Korean series Squid Game is currently enjoying great success. In some of its aspects, it plunges us into some of the ills of South Korean society, such as the high level of household debt, high income inequalities and one of the highest poverty rates in the world. Decryption.
What is Squid Game?
Created by Hwang Dong-hyeok, the South Korean series Squid Game has been broadcast on the Netflix platform since September 17. With more than 110 million views in the space of a month, she is credited with the best launch of a series on this platform.
In Squid Game, hundreds of people in great financial difficulties participate in “games” for children, attracted by the promise of considerable gain. During each game, players are eliminated, both literally and figuratively. The winner of all games – and sole survivor – will win the sum of 45.6 billion won, or more than 33 million euros.
The won is the currency used in South Korea. On October 15, 2021, it was possible to earn 1,371 won for 1 euro.
Criticized for the extreme violence it conveys, the series sheds light on certain characteristics of the South Korean economy, notably the high level of household debt, of strong inequalities, as well as a rate of poverty raised.
South Korean households among the most indebted in the world
In Squid Game, the 456 players agree to participate in mysterious games to escape their financial difficulties and, for some, their over-indebtedness. Fact, South Korean households are among the most indebted in the world. According to data from the Organization for Economic Co-operation and Development (OECD), household debt represented 190% of disposable income in South Korea in 2019.
Only four countries have higher household debt ratios: Australia (210%), the Netherlands (232%), Norway (243%) and Denmark (252%). By way of comparison, French households are indebted to the tune of 122% of their disposable income.
The determinants of household debt
As the graph above illustrates, there are large differences in household debt levels between countries.
For example, households in northern European countries (Denmark, Norway, the Netherlands, etc.) tend to be more indebted than those in southern European countries (Italy, Spain, Greece, etc.) . In addition to the differences in wealth per capita, it is possible to put forward several explanations to account for these differences.
The first of these is related to real estate prices. The higher the latter, the higher the household debt, as real estate represents the first item of household debt.
A second explanatory factor relates to the interest rate level : when they are weak, they encourage households to take on more debt.
Finally, the level of household debt can be influenced by policies and systems, particularly fiscal ones, specific to each of the countries.
In the Netherlands, for example, it was until recently possible to borrow up to 125% of the purchase price of a property. Likewise, loan interest is tax deductible, which favors the indebtedness of Dutch households.
South Korean household debt has risen sharply over the past decade. In 2008, household debt represented 138.5% of net disposable income, an increase of more than 52 percentage points in the space of 11 years! This sharp increase is explained by the conjunction of several factors, in particular: rising real estate prices, the low interest rates, a less risk averse attitude on the part of banking and financial institutions and the development of consumer credit.
According to a study by one of the largest banks in South Korea, the KB Kookmin Bank, the average price per square meter reached, in July 2021, nearly 8,250 euros in Seoul, a level slightly lower than that observed in Seoul. Paris. This average masks, however, as in Paris and in all the big metropolises of strong disparities: in the most upscale districts of the Korean capital (Gangnam-gu and Seocho-gu) the price per square meter exceeds 14,000 euros.
Korea: high income inequalities
Another characteristic of the South Korean economy highlighted by the series: a high level of income inequality. By featuring individuals in great financial difficulty and others relatively wealthy, Squid Game is, therefore, in the line of Parasite, Bong Joon-ho’s film awarded the 2019 Palme d’Or. South Korea is indeed one of the countries with high income inequalities.
In 2018, according to the OECD, it had a D9 / D1 interdecile ratio of 5.5. This means that the top 10% of households earn at least 5.5 times more than the bottom 10% of households. By way of comparison, the interdecile ratio reaches 3.5 in France, 3.6 in Germany and 3.7 in Switzerland.
The D9 / D1 interdecile ratio is one of the most widely used measures of inequality. It connects the 1er and the 9e deciles of the income distribution and is calculated as D9 / D1.
The interdecile ratio therefore relates income such that 10% of the population earns more (D9) to income such that 10% of the population earns less (D1).
Many explanations are generally put forward to explain these strong income inequalities, in particular: the rrecession following the 1997 financial crisis, the labor market segmentation, a low social mobility, etc.
South Korea, “champion” of senior poverty
Finally, South Korea stands out with a relatively high poverty rate. According to OECD data, nearly 16.7% of South Korea’s population lives below the poverty line. Among developed countries, only the United States has a higher poverty rate (17.8%). South Korea is therefore far from the average for OECD countries (11.7%).
The poverty line is here defined as half of the median income. The median income is such that 50% of the population earns more than this income and the remaining 50% less. While according to the definition usually used in Europe, the poverty line is set at 60% of the median income, which automatically increases the number of poor people.
The phenomenon is even more marked for the elderly. Like Gi-Hun’s mother (# 456 player and hero of the series), nearly 43% of Koreans over 66 are believed to be living below the poverty line, according to OECD data .
South Korea is therefore the member country of the OECD with the highest poverty among seniors., ahead of Estonia (38%), Latvia (34%) and Bulgaria (27%). France appears far behind these countries with “only” 4% of people aged 66 and over affected by the phenomenon of poverty, if we retain the definition of the poverty line at 50% of median income.
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The South Korean economy seen through the Squid Game series – La finance pour tous