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2006-09-06 |
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South Korea’s Income Gap Wider Than in Developed Countries |
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The Korea Times, August 18, 2006
The income gap between the rich and poor in South Korea has deepened over the years, becoming wider than in most developed countries, including the United Kingdom and Japan.
According to a report by the Samsung Economic Research Institute (SERI) Thursday, the Esteban & Ray (ER) index, which measures income inequality between income brackets, was 0.0665 for Korea in 2004, higher than that of most developed nations. The higher the index becomes, the wider the income gap is between the haves and the have-nots.
France’s ER index came at 0.0434, followed by Germany with 0.0474, Japan with 0.0507 and Britain with 0.0653. The United States was the only developed country with a wider income disparity than South Korea with an ER index was 0.0833, the report said.
Also, the National Statistical Office (NSO) reported yesterday that the bottom 20 percent in income suffered deficits in the first half of the year as they spent more than they earned to cover rising living costs.
The monthly income of the bottom 20 percent of households in the country stood at about 800,000 won ($840) during the first six months of the year. But they spent an average of 1.2 million per month, resulting in a deficit of 400,000 won, up 10 percent from 360,000 won recorded in the same period last year.
However, the top 20 percent in income recorded a surplus of 1.9 million won per month in the first half, up 4.9 percent from 1.8 million won last year.
The institute attributed Korea’s growing income gap between the rich and the poor to low economic growth since the 1997-1998 Asian financial crisis and the current administration’s focus on redistribution of wealth rather than economic expansion.
"Even though the country’s exports have expanded at a double-digit figure over the past 10 years thanks to rising overseas demand, such an increase has failed to encourage companies to expand corporate investment and create high-paying jobs," it said.
The institute said that is because Korea’s exports have become more centered on capital and technology-intensive industries, such as semiconductors and cellular phones, creating fewer jobs compared to traditional manufacturing businesses.
"To ease deepening economic polarization, the country should make the utmost effort to enlarge its economic pie and create more jobs, increasing the number of middle-class households, which have lately fallen into the low-income bracket," it stressed.
The institute also said the government should encourage companies to expand facility and research-related investment and phase out discriminative activities against non-regular workers to produce high-quality jobs and stabilize the livelihoods of low-income households.
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