Sources

Cost Of Elder Care Forcing Germans To Retire Abroad

DIE WELT (Germany)

Worldcrunch

BERLIN - A growing number of Germans are now moving to retirement homes in Eastern Europe, Spain or Thailand where aged care costs substantially less thanks in large part to lower staff salaries.

Die Welt has obtained figures not made public by Germany’s Federal Statistical Office (Destatis) showing that more and more Germans are unable to afford aged care in their native country.

Those receiving welfare rose in 2010 by 5% to 411,000 from 392,000 in 2009. VdK, a social community lobby group, says the sharp rise is grounds for alarm: “The risk of falling into poverty due to care needs has been growing for years,” says VdK president Ulrike Mascher.

Those needing government subsidies to finance their care rose in 2010, with a total government cost of 3.4 billion euros per year. Three-fourths of those receiving the subsidies live in retirement homes where the average monthly cost for a patient requiring the highest level of care is 2,900 euros. Insurance pays about 1,500 euros of that, while pensions have been stagnating for years.

Mascher says that there are currently 2.4 million people in need of state financial aid. That is expected to rise to 4.7 million by 2050, which would mean every 15th German would need to receive government subsidies, while there are less and less people who are able to support them.

The International Monetary Fund (IMF) has warned that Germany’s social security system is not adapted to high life expectancy and that if something is not done, the country is looking at a hole of up to 2 billion euros by 2050.

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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