Hong Nam-ki: "Income Gap Narrowed Despite COVID-19 Crisis... Effectiveness of Policy Response"

Deputy Prime Minister for Economy Hong Nam-ki is delivering opening remarks at the '2nd Korean New Deal Ministerial Meeting and the 14th Central Emergency Economic Countermeasures Headquarters Meeting' held at the Export-Import Bank in Yeouido, Yeongdeungpo-gu, Seoul on the 20th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Joo Sang-don] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated on the 20th, "The representative distribution indicator, the quintile ratio, fell from 4.58 in the second quarter of last year to 4.23, which means that the income gap between classes has narrowed compared to the same period last year."

Deputy Prime Minister Hong said on his Facebook that regarding the 2020 second quarter Household Trend Survey results announced by Statistics Korea on the same day, "The most notable indicator in household trend statistics is the quintile ratio, which shows the income gap ratio between the lowest income group, the 1st quintile, and the highest income group, the 5th quintile."

He wrote, "In times of crisis, low-income groups with vulnerable employment status are more affected by the crisis, often worsening income distribution. The current COVID-19 situation, described as the worst economic crisis and recession since the Great Depression, was no different." In fact, temporary and daily employment sharply declined since last March, worsening the distribution situation in the first quarter compared to the first quarter of last year. The quintile ratio increased from 5.18 in the first quarter of last year to 5.41 in the first quarter of this year.

Deputy Prime Minister Hong said, "The improvement in the distribution indicator in the second quarter was largely due to policy responses to COVID-19, such as emergency disaster relief payments, consumption coupons for low-income groups, and expanded emergency welfare, which increased transfer income by 81% compared to last year (average for all households)." He evaluated, "I believe this is the result of the people, companies, and government working together to respond so that economic crises do not worsen income inequality as in the past."

He added, "We will make every effort so that the past formula of 'economic crisis = deepening polarization' is no longer taken for granted. The government will strengthen support to compensate for income reduction among vulnerable groups, such as through 575,000 direct job projects and emergency employment stabilization subsidies."

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