In Q3, Only Low-Income Groups See Income Drop... Widening Wealth Gap as Support Funds Lose Effectiveness

2022 3rd Quarter Household Trends Survey Results

[Asia Economy Sejong=Reporter Son Seon-hee] In the third quarter, the employment market improved and face-to-face activities, which had been restricted due to COVID-19, normalized, resulting in an overall increase in household income. However, when looking at income by quintile, the lowest-income group (1st quintile) was the only group to experience a decrease in income, causing a deterioration in distribution indicators. This is analyzed to be due to a reduction in public transfer income such as the COVID-19 coexistence national support fund paid in the third quarter of last year.

On the 17th, Statistics Korea announced the results of the "2022 3rd Quarter Household Trends Survey." The average monthly income per household in the third quarter was 4,869,000 KRW, an increase of 3.0% compared to the same quarter last year. Earned income increased by 5.4%, and business income rose by 12.0%. On the other hand, transfer income decreased by 18.8%.

Looking at each quintile, the average monthly household income of the lowest-income 1st quintile was 1,131,000 KRW, a 1% decrease compared to the same period last year. This is due to a reduction in public transfer income such as disaster relief funds. Lee Jin-seok, head of the Household Income and Expenditure Trends Division at Statistics Korea, explained, "In the third quarter of last year, households corresponding to the bottom 88% of the entire population were paid 250,000 KRW per person, but the effect of that public transfer income disappeared this time, resulting in a negative impact. Especially for the 1st quintile, the proportion of public transfer income is significant."

Except for the 1st quintile, all other quintiles saw income increases. In particular, the high-income 5th quintile household income increased by 3.7% to 10,413,000 KRW, showing the largest income growth among all quintiles.

As such, income for low-income groups decreased while income for high-income groups increased, widening the wealth gap further. The representative distribution indicator, the "equivalized disposable income 5th quintile ratio," worsened to 5.75 times, up 0.41 percentage points (p) from 5.34 times in the same quarter a year ago. Equivalized disposable income is household disposable income divided by the number of household members. The 5th quintile ratio is the income of the 5th quintile divided by that of the 1st quintile; the lower the ratio, the more the wealth gap is alleviated.

The equivalized disposable income 5th quintile ratio has shown a worsening trend for two consecutive quarters following the second quarter.

In this regard, the Ministry of Economy and Finance stated, "The government recognizes the current economic situation, including income and distribution conditions, with seriousness. We will prioritize economic and livelihood stability and continue to promote measures to improve income and distribution conditions, such as strengthening employment and social safety nets for vulnerable groups, alleviating the burden on low-income households through price stabilization, and enhancing economic vitality."

Meanwhile, household expenditures in the third quarter were 3,721,000 KRW, an increase of 6.3% compared to the same quarter last year. With the easing of the COVID-19 situation and increased face-to-face activities, both consumption expenditure (6.2%) and non-consumption expenditure (6.6%) increased. In particular, there were significant increases in food and accommodation (22.9%), entertainment and culture (27.9%), and transportation (8.6%).

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