[Ordinary People Report] Only Top 40% Recover Pre-COVID Income... Gap Widens to Largest in 4 Years

Income Groups 1 and 2 Experienced Income Decline Last Year... Income Gap Between High and Low Earners at 5.23 Times

[Asia Economy Reporter Yu Je-hoon] It has been revealed that only the top 40% of households in South Korea have recovered to pre-COVID-19 pandemic levels. The average monthly total income of the lower-income groups continues to decline, and the gap between the highest and lowest income quintiles has widened to the largest level in the past four years.

Shinhan Bank announced on the 5th that it published the "Shinhan Ordinary People Financial Report" containing these findings. The Ordinary People Financial Report was compiled based on a survey and analysis conducted via email questionnaires targeting 10,000 economically active individuals aged 20 to 64 nationwide.

According to Shinhan Bank, the average monthly total income of economically active households aged 20 to 64 last year was 4.93 million KRW, an increase of 3.1% (150,000 KRW) compared to the previous year. In 2020, the average monthly total income decreased by 1.6% (80,000 KRW) to 4.78 million KRW due to the impact of COVID-19, but last year it recovered to the 2019 pre-pandemic level of 4.86 million KRW.

There were differences in the average monthly income changes by income bracket. The 5th quintile (top 20%) and 4th quintile (top 40%) saw total incomes increase by 5.9% and 4.7%, reaching 9.48 million KRW and 5.83 million KRW respectively, surpassing the 2019 income levels (5th quintile 9.02 million KRW, 4th quintile 5.66 million KRW).

On the other hand, the 3rd quintile (top 60%) had an average monthly income of 4.47 million KRW last year, a 0.9% increase from the previous year, but still below the 2019 level of 4.53 million KRW. The 1st quintile (bottom 20%) and 2nd quintile (bottom 20-40%) experienced declines in average monthly total income last year by 1.1% and 1.6%, falling to 1.81 million KRW and 3.05 million KRW respectively, showing negative growth. As a result, the average monthly total income of the 1st and 2nd quintiles remained at the lowest levels in the past four years.

Shinhan Bank explained the differences among income brackets, stating, "The 1st and 2nd quintiles continued to decline last year, marking the lowest income levels in the past four years. Employment instability caused by COVID-19 appears to have had an impact. Conversely, the incomes of the 4th and 5th quintiles recovered to above 2019 levels, showing the largest growth in the past four years, with higher-income groups experiencing greater income increases."

Consequently, the gap in average monthly household total income between low- and high-income groups widened to the largest level in four years. The income gap between the 5th and 1st quintiles had remained around 4.8 times, ranging from 4.76 to 4.88 times until 2020, but last year it expanded to 5.23 times. Shinhan Bank noted, "While the income of the 1st quintile has steadily decreased since the outbreak of COVID-19 in 2020, the 5th quintile saw a decrease of 70,000 KRW in 2020 but a significant increase of 530,000 KRW last year," indicating a deepening polarization between low- and high-income groups.

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