Gov't welfare spending narrows income inequality in Q3
By Lee Kyung-min
The business income for the self-employed dropped sharply in the third quarter as a growing number of small business owners decided to shut down amid the economic downturn.
According to data released by Statistics Korea on Thursday, the monthly average business income for households stood at 879,800 won ($747) in the third quarter, down 4.9 percent from a year ago, the steepest fall since 2003 when the agency began compiling related data.
"The latest data indicates that the self-employed are essentially perishing," Yonsei University economist Sung Tae-yoon said.
"Many self-employed people in the top-income bracket continue to take a hit amid the economic slowdown. With a series of minimum wage hikes, their bottom lines are deteriorating fast."
The critical comment is in line with data that showed the number of households with a self-employed family member in the top 40 percent income bracket fell, and the number of those in the bottom 40 percent increased.
"Households with self-employed family members ― usually the breadwinners ― either saw their incomes plummet or disappear altogether, after they became unemployed, an apparent result of business shutdown," a statistics agency official said.
However, the overall income inequality between the haves and have-nots narrowed in the third quarter due to the government's financial support for low-income households.
The monthly average income of the bottom 20 percent came to 1.37 million won in the third quarter, up 4.3 percent from a year earlier.
In contrast, households in the upper 20 percent income range earned 9.8 million won during the cited quarter, up 0.7 percent from a year earlier.
As a result, the nation's income distribution ratio, showing the degree of income disparity, came to 5.37 percent, down from 5.5 percent a year earlier.
The lower the ratio ― disposable income earned by the top 20 percent divided by that earned by the bottom 20 percent ― the less the income polarization is.
"The low-income earners had increased income thanks to government spending including increased pension and other subsidies," the official said.
Despite an improvement in the overall income gap, the fundamental situation for low-income households has remained desperate as their income growth has not been led by the creation of more quality jobs.
The growth is backed largely by a rise in welfare spending on the lowest income earners and the creation of part-time jobs for senior citizens.
Those in the bottom 20 percent income bracket saw their wage incomes decline 6.5 percent, extending a continued drop for the seventh quarter in a row.
This was offset by an 11.4 percent increase in what the government calls transfer income including tax benefits and cash earned via social welfare programs.
The total monthly household income stood at 4.87 million won, up 2.7 percent from the year before.
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The business income for the self-employed dropped sharply in the third quarter as a growing number of small business owners decided to shut down amid the economic downturn.
According to data released by Statistics Korea on Thursday, the monthly average business income for households stood at 879,800 won ($747) in the third quarter, down 4.9 percent from a year ago, the steepest fall since 2003 when the agency began compiling related data.
"The latest data indicates that the self-employed are essentially perishing," Yonsei University economist Sung Tae-yoon said.
"Many self-employed people in the top-income bracket continue to take a hit amid the economic slowdown. With a series of minimum wage hikes, their bottom lines are deteriorating fast."
The critical comment is in line with data that showed the number of households with a self-employed family member in the top 40 percent income bracket fell, and the number of those in the bottom 40 percent increased.
"Households with self-employed family members ― usually the breadwinners ― either saw their incomes plummet or disappear altogether, after they became unemployed, an apparent result of business shutdown," a statistics agency official said.
However, the overall income inequality between the haves and have-nots narrowed in the third quarter due to the government's financial support for low-income households.
The monthly average income of the bottom 20 percent came to 1.37 million won in the third quarter, up 4.3 percent from a year earlier.
In contrast, households in the upper 20 percent income range earned 9.8 million won during the cited quarter, up 0.7 percent from a year earlier.
As a result, the nation's income distribution ratio, showing the degree of income disparity, came to 5.37 percent, down from 5.5 percent a year earlier.
The lower the ratio ― disposable income earned by the top 20 percent divided by that earned by the bottom 20 percent ― the less the income polarization is.
"The low-income earners had increased income thanks to government spending including increased pension and other subsidies," the official said.
Despite an improvement in the overall income gap, the fundamental situation for low-income households has remained desperate as their income growth has not been led by the creation of more quality jobs.
The growth is backed largely by a rise in welfare spending on the lowest income earners and the creation of part-time jobs for senior citizens.
Those in the bottom 20 percent income bracket saw their wage incomes decline 6.5 percent, extending a continued drop for the seventh quarter in a row.
This was offset by an 11.4 percent increase in what the government calls transfer income including tax benefits and cash earned via social welfare programs.
The total monthly household income stood at 4.87 million won, up 2.7 percent from the year before.
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