Disparity Between the Rich and the Poor Increasing
Disparity Between the Rich and the Poor Increasing
  • Reporter Chae Seung-hyun
  • 승인 2019.02.28 02:30
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▲Increasing Income Gap
▲Increasing Income Gap

The income gap between the upper and lower classes has widened in the past three years. The percentage of the poor has been declining for the past two years. However, compared to member countries of the Organization for Economic Cooperation and Development (OECD), Korea’s relative poverty rate is very high. 
According to the Korea Daily’s analysis of income concentration in 21 OECD member countries that have released indicators to the WID (World Inequality Database) since 2010, the top 10 percent of income earners who earn over 50 million KRW annually in Korea take up 43 percent or more of total income. Korea’s top 10 percent income concentration was ranked fourth highest among OECD member countries. 
There are claims that the income inequality in Korea has worsened due to some ultra-high-income earners, but in reality, the gap between the top 10 percent and the bottom 10 percent, such as conglomerates, state-run companies, full-time financial workers and public servants, is larger than other countries. The increasing barriers to high quality jobs have led to the growth of numbers of economically inactive people, such as women and students, which further led to the increase of the proportion of low income earners.
It is not just the top and bottom 10 percent. The quintile scale of disposable income, an indicator of income disparity between the top 20 percent and the bottom 20 percent, is 7.00 times higher than that of 2016. In other words, the income gap between the upper and lower classes has widened.  This means that the higher the quintile scale, the greater the income inequality between the highest and lowest income groups. And the quintile rate, which shows the degree of income inequality, was the highest in 11 years since 2007. Meaning that the income imbalance has worsened to the level before and after the global financial crisis. 
The government’s policy of raising wage costs for companies, such as raising the minimum wage and reducing working hours, could lead to job losses, further increasing the concentration of income in the future. The concentration of income among the top 10 percent of households is showing an increasing trend, rising to 42.7 percent in 2014, 43.1 percent in 2015, and 43.3 percent in 2016. 
In fact, the income gap revealed by the National Statistical Office’s quarterly household trend survey is also growing. In the third quarter of 2018, the average monthly income of households in the top 10 percent reached 8.653 million KRW, 50 times that of those in the first 10 percentile and 173,000 KRW. The results of income concentration in 2019 will be even worse as workers who were paid minimum wage levels are losing jobs due to the minimum wage increase.
Although the government has significantly increased public transfer income by introducing child income and raising the amount of basic pension payments, it has been revealed that the income reduction of low-income households is continuing. The first and second income quintile, or the bottom 40 percent of the income bracket, has declined together for the third consecutive quarter this year.