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Self-employed hit hard by income-led growth policy
By Jhoo Dong-chan
The nation's household income grew in the second quarter of the year, but the income disparity between the haves and have-nots widened, the state-run statistics agency said Thursday.
The widening income gap was attributed to a decrease in earnings for small business owners and the self-employed hit hard by the government's income-led growth policies, such as minimum wage hikes and a shorter workweek.
According to Statistics Korea, the average household earned 4.7 million won between April and June this year, up 3.8 percent from its figure a year ago.
However, the income gap between the rich and poor has massively widened since the average income of the haves expanded while that of the have-nots stagnated at the current level in the period.
The data suggests the average monthly income of the bottom 20 percent of households stood at 1.32 million won in the second quarter of the year, up 0.04 percent from a year ago.
The group's income had dropped for five consecutive quarters until the first quarter of 2019, but managed to stop its downward trend this quarter.
Meanwhile, the comparable figure for the top 20 percent group was 9.42 million won in the period, up 3.2 percent from a year ago.
The monthly disposable income of those in the bottom 20 percent income bracket dropped 1.3 percent, while that for the upper 20 percent income group grew 2.3 percent, the data added. The disposable household income is the total income minus current taxes imposed on each household.
The ratio measuring the inequality of disposable income distribution, stretched to 1:5.3 in the second quarter of the year. This means the nation's wealthiest household group earned 5.3 times more than the poorest group in the period.
It was the largest figure since the agency started collecting related data in 2003.
The government displayed its frustration with the nation's widening income disparity.
"The government tried its utmost to create jobs for the elderly and poor, but the efforts didn't really reflect in the average income of the bottom 20 percent income households," said the state-run statistics agency's Park Sang-young.
Experts said the Moon Jae-in administration's signature "income-led growth" policy is instead putting pressure on those in the nation's lower income bracket.
"The latest data displayed the nation's employers, especially small business owners or self-employed people, suffered a decline in their income in the period due to the rapid growth of the minimum wage," said Yonsei University economist Sung Tae-yoon.
"The employers downsized their hiring, and this led to the lowest income bracket's disappointing income figure in the second quarter of the year. The government should shift the direction of its economic doctrine immediately."
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