The monthly average income of households in the bottom 20 percent bracket dropped by the largest margin in the first quarter despite the Moon Jae-in government’s efforts to narrow income disparity and promote income-led economic growth.
According to Statistics Korea on Thursday, the nominal monthly income of households in the bottom 20 percent range was 1.29 million won ($1,197.1) in the January-March period, down 8 percent from the same period a year ago. It is the sharpest quarterly fall since the government started compiling related data in 2003.
The monthly average income of households in the country’s second-lowest income bracket dropped 4 percent to 2.7 million won during the same period, which is also the biggest on-year decline.
The government noted that the latest steep fall in the income for households in the bottom 20 percent range is due to more structural factors such as the aging society. According to the finance ministry, the steep fall was mainly driven by a rise in the number of households led by those aged 70 years or more with limited economic activity in the income brackets.
The share of households led by those aged 70 years or more in the lower income bracket, however, increased by only 6.5 percentage points from 36.7 percent to 43.2 percent this year over the same period, data showed.
Industry analysts noted that the minimum wage hike has placed burden on businesses which in return cut back on job hiring and therefore less opportunity for income growth. The country’s minimum wage rose by 16 percent on year to 7,530 won this year. Industry analysts argued that the latest figures are rather a sign that shows lack of effectiveness of the government’s push for income-led growth despite the record minimum wage hike.
The monthly average income of households in the upper 20 percent range, meanwhile, earned 10.2 million won in the first quarter ended March this year, up 9.3 percent from a year ago, Statistics Korea data showed. It is the first time the figure surpassed the 10 million won mark since related data began to be compiled in 2003.
The ratio of the equivalized disposable income of the first quintile to that of the fifth quintile, which is a key barometer of earnings equality, stood at 5.95 in the January-March period. This is the highest since 2003, showing widening income disparity despite the government’s efforts to reduce inequality level.
By Lee Yu-sup and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]