Income Distribution Gap Slightly Improved... Persistent Inequality Remains

Eun Sun-hyun, Director of the Social Statistics Bureau at Statistics Korea, is briefing on the results of the 2019 4th quarter Household Trends Survey (Income Section) on the morning of the 20th at the Government Sejong Complex in Sejong City.
[Photo by Yonhap News]

[Asia Economy Reporter Joo Sang-don] Income distribution slightly improved in the fourth quarter of last year. This was due to a rebound in the income of the bottom 20%. However, due to the economic downturn, the situation remains worse than the pre-financial crisis level.

According to Statistics Korea's "2019 Fourth Quarter Household Trends Survey (Income Section)" released on the 22nd, the equivalized disposable income quintile ratio was 5.26 times, lower than 5.47 times in the fourth quarter of 2018 and 5.37 times in the third quarter of last year.

The equivalized disposable income quintile ratio is the income of the top 20% (5th quintile) divided by the income of the bottom 20% (1st quintile), and a smaller ratio indicates an improvement in income distribution.

This ratio increased up to 5.20 times in 2008 and 5.23 times in 2009 during the financial crisis, then appeared at levels between 4.37 and 4.63 times from 2013 to 2017. However, it worsened to 5.47 times in 2018.

The slight improvement in income distribution in the fourth quarter of last year was largely due to an increase in earned income in the 1st quintile. The average monthly income of the 1st quintile was 1,324,000 KRW, up 6.9% compared to the same period the previous year. In particular, earned income increased by 6.5% to 458,400 KRW. This is the first increase in earned income for the 1st quintile in eight quarters since the fourth quarter of 2017 (+20.7%).

Eun Soon-hyun, Director of the Social Statistics Bureau at Statistics Korea, explained, "The increase in income for the 1st quintile is a combined result of employment growth and various government social benefit policies. The most important factor is believed to be the increase in earned income through government job projects."

On the other hand, the income of self-employed individuals, "business income," decreased by 2.2% for the fifth consecutive quarter, marking the longest period of decline on record. Director Eun said, "This appears to reflect sluggishness in wholesale and retail trade, personal services, and food and accommodation sectors."

Meanwhile, the average monthly income per household in the fourth quarter of last year was 4,772,000 KRW, an increase of 3.6% compared to the same period the previous year (3.3% in real terms). Current income increased by 4.0%, and earned and transfer income rose by 5.8% and 3.7%, respectively. Average monthly non-consumption expenditure per household also increased by 9.8% to 1,047,000 KRW.

This content was produced with the assistance of AI translation services.