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Household income grows 3.4 pct in 2014 on improved employment

All Headlines 12:00 February 13, 2015

SEJONG, Feb. 13 (Yonhap) -- South Korean household income grew 3.4 percent on-year in 2014 as more people found employment, but consumption dropped for the fourth consecutive year, a government report showed Friday.

According to the report by Statistics Korea, the monthly income of households with two members or more stood at an average of 4.3 million won (US$3,875) last year, up from 4.16 million won in the year before.

Inflation-adjusted household income also moved up 2.1 percent over the same period.

The report attributed the increase to more people joining the workforce that resulted in better earnings by household members. It claimed the faster pace of growth compared to the previous year contributed to the rise in income.

The government said some 530,000 new jobs were created last year compared to 440,000 for 2013. The country is estimated to have grown 3.4 percent vis-a-vis 3 percent growth confirmed for 2013.

The report showed that households' earned income increased 3.9 percent on-year to a monthly average of 2.87 million won. Households' business-related income rose 0.5 percent to 862,200 won.

"The rise in earned income was the single largest factor for last year's income increase," an official at the statistics agency said.

Household spending likewise increased 2.8 percent to 2.55 million won, with the pace of growth accelerating from 0.9 percent in 2013.

The findings showed people spending more on transportation and recreation and other services, while cutting back on telecommunication, housing and utilities.

Transportation outlays were buoyed by more people buying cars, while utilities were affected by lower energy prices.

On non-consumption expenditures, which reached 805,000 won, the total rose 3 percent on-year from a gain of 2.8 percent in 2013. Outlays in this field include taxes, pensions and insurance.

The report showed that households' monthly disposable income -- total income minus non-consumption spending -- stood at just under 3.50 million won, up 3.5 percent from a year earlier. In 2013, disposable income grew 1.9 percent.

The average monthly surplus for a household stood at 947,000 won, a solid gain of 5.2 percent on-year.

The report, on the other hand, showed the numbers for households' "average consumption propensity" -- the ratio of total consumption spending to disposable income -- dropped to 72.9 percent, a 0.4 percentage difference from the previous year. This marks the fourth year in a row that it contracted compared to the year before. Last year's numbers were the lowest reached since corresponding figures were tallied from 2003 onwards.

The low numbers are a sign that people are withholding spending, despite a rise in earnings, with the statistical office saying that the trend is related to the rapid aging of the South Korean society that is causing manly elderly citizens to cut back on consumption.

For the fourth quarter, average household income stood at 4.26 million won, up 2.4 percent from the year before, with expenditures edging up 0.9 percent to 2.5 million won. Non-consumption spending reached 761,000 won with disposable income standing at a little over 3.5 million won, for a gain of 2.9 percent on-year.

The monthly household surplus reached 997,000 won, a 8.3 percent spike from the year before.

yonngong@yna.co.kr
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