[Report on Ordinary People] COVID-19 Worsens Income Polarization... Only Top 40% Recover Previous Income

Average Monthly Income of Economically Active Households 4.93 Million Won
Gap Between Low and High Income Groups Largest in 4 Years
Income Continues to Decrease with Job Instability

The aftermath of the COVID-19 pandemic has also led to income inequality among households in South Korea. Only the top 40% of households have recovered to their pre-pandemic average monthly total income levels, while the total income of lower-income groups continues to decline. In particular, the gap between the highest and lowest income groups, divided into five segments each representing 20% from the top, has widened to the largest level in the past four years.

According to the Shinhan Bank's Shinhan Ordinary People Financial Report published on the 5th, 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 surpassed the 2019 pre-pandemic level of 4.86 million KRW.

There were differences in the changes in average monthly income by income segment. The 5th segment (top 20%) and 4th segment (top 20-40%) saw their total income increase by 5.9% and 4.7% respectively compared to the previous year, reaching 9.48 million KRW and 5.83 million KRW, surpassing the 2019 income levels (5th segment 9.02 million KRW, 4th segment 5.66 million KRW).

On the other hand, the 3rd segment (middle 20%) 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. For the 1st segment (bottom 20%) and 2nd segment (bottom 20-40%), the average monthly total income last year decreased by 1.1% and 1.6% respectively compared to the previous year, falling to 1.81 million KRW and 3.05 million KRW, showing negative growth. The average monthly total income for the 1st and 2nd segments remained at the lowest levels in the past four years.

As a result, 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 segments 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 stated, "While the income of the 1st segment has steadily decreased since the outbreak of COVID-19 in 2020, the 5th segment saw a decrease of 70,000 KRW in 2020 but increased by 530,000 KRW last year, showing a significant rise," adding that "polarization between low- and high-income groups has intensified."

The More Job Instability, The More Income Continues to Decline

The cause of this income disparity can be inferred from changes in income by employment type. According to the survey by employment type, the average monthly earned income of regular wage workers last year increased by 70,000 KRW from the previous year to 4.85 million KRW, surpassing the 2019 level of 4.78 million KRW.

However, the average monthly business income of self-employed individuals was 4.82 million KRW, falling short of the 2019 figure of 4.99 million KRW. Non-regular wage workers earned 3.37 million KRW, which was below not only the pre-COVID-19 period but also the 2018 level of 3.48 million KRW. Freelancers also saw a slight increase to 3.13 million KRW but still remained below the 2018 level of 3.32 million KRW.

Shinhan Bank noted, "Regular wage workers' earned and business income increased by 70,000 KRW compared to 2019 before the pandemic, but self-employed, non-regular wage workers' earned and business income decreased over the past two years. Freelancers saw a slight increase but it was insufficient to recover the 330,000 KRW decrease in 2020," and added, "As face-to-face industries were hit by COVID-19, income declines continued among unstable job groups such as the self-employed, non-regular workers, and freelancers."

This income disparity also affects quality of life. In the report, respondents who answered that their quality of life was 'lowest' had an average income satisfaction score of 1.3 points, the lowest among all areas (income, consumption, savings, debt, housing, retirement, employment). Additionally, 74.7% of respondents rated their income status as 'very bad (1 point),' the highest proportion among all areas.

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