This past fall, global audiences were gripped by the haunting and thrilling Netflix series Squid Game. The show follows a number of South Koreans who are in so much debt, they agree to participate in terrifying and even fatal contests to solve their financial woes. Writer-director Hwang Dong-hyuk uses the series to level several thinly veiled criticisms towards capitalist systems, but what many foreign viewers don’t know is that the series is particularly resonant in South Korea for a reason.

South Korea’s Debt Problems

South Koreans have a debt problem. Many people around the world do, but in South Korea, the problems are especially pronounced. Household debt in the country is now at an eye-watering equivalent to over 100% of GDP. Part of the problem is that loans are simply too easy to secure, similar to the problems behind the subprime mortgage crisis in the U.S. that caused a global recession in 2008.

This indebtedness has gone hand-in-hand with increases in the income gap, youth unemployment, and cost of living in big cities. And of course, the COVID-19 pandemic has not helped. With the total amount of debt of South Koreans exceeding GDP by 5%, even saving every penny earned for a year won’t get many South Koreans out of debt.

SMEs in South Korea

It’s important to note that this debt is not really the product of an increase in the price of consumer goods or a lack of “financial literacy.” Personal spending is not really the problem. It’s more due to people taking out business loans to start, expand, or maintain small- and medium-sized enterprises (SMEs).

South Korea has a higher percentage of self-employed people than most countries. The self-employed form fully a quarter of the entire job market. This makes the economy more vulnerable to downturns. A central bank study in 2017 found that only 38% of small businesses survive three years in South Korea.

The government encourages start-ups, but many feel they don’t do much to help struggling businesses. And there is much less separation of corporate debt and personal debt, as there is in countries such as the US. Personal bankruptcies surged to a five-year high of 50,379 in 2020 and the percentage of South Koreans falling behind on personal debt payments has risen to 55.47% by mid-2021, up from 48% in 2017. Add these figures to a culture in which personal debt has long been stigmatized, and it’s not hard to understand why many South Koreans feel as desperate as the characters in Squid Game.

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