COVID-19 Deepened Income Inequality... 'Bottom 20%' Income Down 1.1%, 'Top 20%' Up 2.9%

Statistics Korea, Results of the 2020 Q3 Household Trends Survey

Government Cash Support Leads to Record Increase in 'Public Transfer Income' in Q3
Lower 20% Increased by 15.8% While Upper 20% Surged by 40.3%

Equivalized Disposable Income Quintile Ratio at 4.88 Times... Worsened by 0.22 Points in One Year

[Sejong=Asia Economy Reporter Joo Sang-don] The impact of the novel coronavirus disease (COVID-19) has further deepened income inequality. While labor income for the bottom 20% income group (1st quintile) decreased more than that of the top 20% (5th quintile), the increase in transfer income due to government support was greater for the 5th quintile. As a result, the representative distribution indicator, the equivalized disposable income quintile ratio, worsened by 0.22 points compared to a year ago.

On the 19th, Statistics Korea announced the '2020 Q3 Household Income and Expenditure Survey Results' containing these details.

According to the report, the average monthly income per household in Q3 was 5,305,000 KRW, a 1.6% increase compared to the same quarter last year. Despite labor income and business income decreasing by 1.1% and 1.0% respectively, public transfer income?income provided free of charge by the central or local governments?increased by 29.5%, causing total transfer income to rise by 17.1%.

The average monthly income of households in the 1st and 2nd quintiles decreased, while income in the 3rd, 4th, and 5th quintiles increased. In particular, the 1st quintile's average monthly income was 1,637,000 KRW, down 1.1% from the same quarter last year, whereas the 5th quintile's average monthly income rose by 2.9% to 10,397,000 KRW.

Jung Dong-myung, Director of the Social Statistics Bureau at Statistics Korea, explained, "Due to the government's comprehensive economic measures, public transfer income increased the most on a Q3 basis. The increase was higher in the 4th and 5th quintiles compared to other quintiles, largely influenced by the special child care support provided in September this year." This is because the proportion of elementary school-aged household members in the 5th quintile is about three times higher than that in the 1st quintile.

The average monthly consumption expenditure per household was 2,945,000 KRW, a 1.4% decrease compared to the same quarter last year. While expenditures on food and non-alcoholic beverages (18.7%), household goods and services (19.8%), and health (12.8%) increased, spending on clothing and footwear (-13.6%), transportation (-12.4%), recreation and culture (-28.1%), and education (-13.6%) decreased. The decrease in consumption expenditure was larger for the 5th quintile (-1.0%) than for the 1st quintile (-0.4%).

The average monthly disposable income per household, calculated by subtracting non-consumption expenditures from income, was 4,261,000 KRW, a 3.2% increase compared to the same quarter last year. The higher-income 5th quintile saw a larger increase. The 1st quintile increased by 3.5% to 1,346,000 KRW, and the 5th quintile increased by 4.0% to 8,137,000 KRW.

The equivalized disposable income quintile ratio in Q3 was 4.88 times, up 0.22 points from 4.66 times in the same period last year. It widened by 0.65 points compared to the previous quarter (4.23 times). Income inequality is increasingly worsening.

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