Income Disparity Widens to Record Level
23 February, 2019
The gap between rich and poor grew even further in the fourth quarter last year as the government's income-led growth policy foundered on the rocks of reality.
According to Statistics Korea on Thursday, the bottom 20 percent of wage earners made W1.24 million a month in the last three months of 2018, down 17.7 percent from a year earlier (US$1=W1,126). That was the biggest plunge since the government began tallying the statistics in 2003.
Even in the years following the 2008 global financial crisis, income in the lowest bracket rose 3.2 and 6.8 percent in 2009 and 2010.
Disposable income, which excludes taxes and other costs, totaled W988,200, down W240,000 and below W1 million for the first time since 2011.
The main reason seems to have been the sharp increase in the minimum wage last year, which cause many small employers to lay off staff or cut their hours.
The proportion of households in the bottom 20 percent whose main breadwinner was unemployed rose from 43.6 percent in 2017 to 55.7 percent in 2018. The number of employed people in the bracket also fell from 0.8 to 0.64 person per household, while household income in the second lowest bracket also fell four percent.
But the top 20 percent made an average monthly salary of 9.32 million, up a whopping 10.4 percent on-year and the first time it posted double-digit growth.
Sung Tae-yoon at Yonsei University said, "The sharp minimum wage hike has seriously worsened income disparity and clearly shows that aiming to stimulate growth by evening out pay inequality ended up failing miserably."
The government convened an emergency meeting of economy-related ministers after the data was announced, and Finance Minister Hong Nam-ki admitted he feels "heavy responsibility" for worsening income disparity. He vowed to promote a more equal distribution of wealth.
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