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Not marts or restaurants: Where gov't vouchers boosted sales the most

Published: 14 Aug. 2025, 15:33 Updated: 14 Aug. 2025, 20:04

JIN MIN-JI
[email protected]

A street filled with hagwons, or private cram schools, in Dogok-dong in Gangnam District, southern Seoul. [JOONGANG ILBO]

Government’s consumer coupons drove the biggest spending surge in hagwon, or private cram schools, as families seek to cut fixed costs amid inflationary pressure.

The 14 trillion won ($10.12 billion) program was intended to stimulate domestic demand and revive the sluggish economy, which the state-run think tank Korea Development Institute projected to expand by less than 1 percent this year. The Bank of Korea estimated that the coupon distribution would expand the economy by 0.2 percentage points.

However, many households have so far used the funds on expenses they would have incurred regardless, particularly on hagwons, which education-driven parents are often unwilling to give up.

Among all categories, hagwon saw the largest surge in credit and debit card spending during the first two weeks following the distribution of the government coupons in mid-July, according to the government data sourced from nine credit card companies.
Spending on hagwon surged 33.3 percent from a week earlier in the fourth week of July — when the coupons were distributed — compared to the previous week, reaching 416.8 billion won.

This far outpaces the 10.5 percent spending growth at restaurants and the 4.1 percent increase at supermarkets and groceries — sectors that were expected to generate additional spending to drive domestic demand.

Growth in hagwon spending remained strong the following week at 22.8 percent, just behind the 22.9 percent increase seen in clothing and miscellaneous goods.

Of the total 5.77 trillion won distributed through debit and credit cards, 2.65 trillion won had been spent as of Aug. 3, according to the Ministry of the Interior and Safety. The largest share went to restaurants, which accounted for 1.10 trillion won — or 41.4 percent of total spending — while hagwons made up 3.8 percent.

A signboard outside a market in Dongdaemun District in eastern Seoul that reads government consumer coupons can be used [YONHAP]

Families that chose to cover fixed costs over new purchases cited mounting inflationary pressure, which remains high as food prices continue to stay elevated.

“Our family spent the entire 600,000 won we received on multiple hagwon — from basketball to drums and guitar,” said a mother of two children who wished to be identified by her surname Park. “I already feel a lot of pressure from steep inflation, and I have no intention of increasing our household spending.”

Some spent it on hagwon as it was the cost that could not be compromised.

“I used the coupon my child and I received to pay for his swimming class,” said Mila Jin, mother of a seven-year-old. “I used it to pay for the hagwon tuition I had to pay anyway.

“Many consumers are trying to offset the existing costs rather than increasing consumption due to inflationary pressure,” said Choi Cheol, who teaches consumer economics at Sookmyung Women’s University.

Prices of groceries and nonalcoholic beverages jumped 3.5 percent in July from a year earlier, while the headline inflation has stabilized to 2.1 percent, up 0.1 percentage point over the same period, according to Statistics Korea.

“If the coupons are used in places where people would have spent money anyway, it would be difficult to say they have had a meaningful impact on the economy in line with the original intent of the program.”

The second round of the coupons is scheduled to be distributed starting next month.

BY JIN MIN-JI [[email protected]]