South Korea: income affects senior households’ spending more than assets
Income has a greater impact than assets on consumption by South Korean households comprised of seniors, a parliamentary report said Tuesday. A 1 percent increase in elderly households’ earned income made their consumption expenditure go up 0.09 percent between 2006-2016, according to the report by the National Assembly Budget Office. In contrast, elderly households’ spending climbed only 0.01 percent when their income from financial assets and properties grew by the same margin.
The report also showed that a 1 percent gain in total income made their spending increase 0.19 percent. Their consumption expenditure rose 0.08 percent with the same rise in total assets. The report was based on a survey of senior South Koreans, conducted by the Korea Employment Information Service over the 10-year period. The findings suggest that government policies to create more jobs for seniors could help animate the country’s total consumer spending.
The report further said households comprised of more elderly people showed lower levels of consumption, with their average consumption propensity, or the ratio of total spending to disposable income, falling at a fast clip. The average consumption propensity for households of people aged 60 or older sank to 67.2 percent in 2016 from 79.5 percent in 2006. The 2016 figure for total households came to 71.1 percent. “There is a high possibility that with gradual population aging, South Korea’s total consumption expenditure may go south down the road should there be no great changes in income,” the report said. South Korea became an aged society in 2017, with the ratio of people aged 65 and older hitting 14 percent of its 50 million population. The country is forecast to become a super-aged society in 2026, when the figure is likely to exceed 20 percent.
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