Income gap at worst level in more than decade in Q2

All News 12:00 August 22, 2019

By Kim Kwang-tae

SEJONG, Aug. 22 (Yonhap) -- South Korea's household income inequality widened to the worst level in more than a decade in the second quarter, data showed Thursday, despite the government's efforts to bridge the gap for the low-income bracket.

An average household earned 4.7 million won (US$3,900) per month in the April-June period, up 3.8 percent from the previous year, according to the data compiled by Statistics Korea.

The monthly average income of the bottom 20 percent income bracket came to 1.32 million won in the second quarter, unchanged from a year earlier.

In contrast, households in the upper 20 percent income range earned 9.42 million won during the cited quarter, up 3.2 percent from a year earlier.

The data also showed that monthly disposable income of those in the bottom 20 percent income bracket rose 1.9 percent, slower than the 3.3 percent for the upper 20 percent income group.

Consequently, the country's distribution ratio for disposable income reached 5.3 in the April-June period -- the highest level for any second quarter since 2003, when the government began to compile relevant data.

A bigger ratio means increased polarization in income distribution.

The data came as South Korea has been pushing for "income-led growth" under the Moon Jae-in administration that envisions a virtuous economic cycle, in which hikes in the minimum wages of low-income people could lead to increased spending that in turn could boost economic growth.

South Korea raised its minimum wage to 7,530 won (US$6) per hour in 2018, up 16.4 percent from 2017. The minimum wage was raised by 10.9 percent on-year to 8,350 won per hour in 2019.

But some critics claim the minimum wage hikes have increased the burdens on businesses, especially microbusiness owners and the self-employed.

The minimum wage for next year has been set at 8,590 won (US$7.16) per hour, up 2.9 percent from 2019, the slowest growth in a decade amid an economic slowdown and sluggish job market.