As the economic slump drags on, a growing number of highly paid professionals like doctors, lawyers and accountants are also beginning to feel the pinch. Competition is intensifying as new licensed practitioners pour into the market every year, and the deepening slump is driving many professionals to the verge of bankruptcy.
The Chosun Ilbo looked at the professions of 742 people who applied for court-mediated debt-rescheduling programs and found that 47 percent or 348 applicants were doctors, lawyers, dentists, oriental medicine doctors or pharmacists. Those who applied for debt rescheduling had taken out more than W1 billion in loans based on collateral or W500 million without collateral (US$1=W1,130).
Even in 2009, at the height of the global financial crisis, only 93 professionals applied for court-mediated debt rescheduling, and that dropped to 82 in 2010. It rose again to 107 last year, and in the first eight months of this year 66 highly-paid professionals applied, so the number for the whole year could be even higher than in 2011.
More and more of these professional "are unable to repay hundreds of millions of won worth of loans they took out to cover their start-up fees, including purchases of expensive equipment and rent," a court official said.
"The slow economy is keeping people from spending money on non-urgent needs such as beauty or staying fit," said one doctor with a private practice in downtown Seoul. Scores of plastic surgeons in the swank Gangnam district of southern Seoul seem to be going bankrupt, while the wide availability of health supplements is causing oriental medicine doctors to close down. "About10 percent of all doctors look like they're going to default," said a medical industry insider.
Many lawyers and accountants are also closing their businesses to find other kinds of work. In 2004, 8.6 percent of lawyers or 592 closed their offices, but the number rose to 17.6 percent or 2,507 this year. The situation is the same for accountants. In 2004, 24.5 percent of accountants or 1,753 closed their offices temporarily, but this year there were 32.6 percent or 4,880.
This is partly because over the last 10 years, 1,000 new lawyers and accountants have entered the job market ever year, so competition for ever fewer openings amid this recession is getting fierce.