By Kim Tong-hyung
The gulf between society’s richest and poorest is wider than ever before, official figures suggest, underlining growing discontent as the parliamentary and presidential elections approach.
Income growth among the poorest 10 percent of families was significantly slower than households in other brackets, according to data from Statistics Korea, further splitting the wealth gap that is now broader than it was in 2008, when pain from the Lehman Brothers collapse was fresh.
Korea’s P90:P10 ratio, which compares dispersion at the 10 percent of people with the highest income with dispersion at the bottom 10 percent, came in at 4.82 for 2011, up from 4.8 in 2010. The P50:P10 ratio, which measures median income to the value of the poorest 10 percent of people, was at 2.59 last year from 2.53 in 2010.
By equalized disposable income, the bottom 10 percent of the income bracket, or P10, consisted of those who earned less than 643,000 won (about $572) a month, while the richest 10 percent, or P90, earned more than 3.1 million won a month.
The P90:P50 ratio decreased from 1.9 in 2010 to 1.86 last year, indicating that the gap between the middle class and upper-end income earners narrowed slightly.
The P90:P10 ratio was at 4.53 in 2006 and has been consistently growing since then, measured at 4.69 in 2007, 4.81 in 2008 and 4.79 in 2009. The P50:P10 ratio has also grown every year during the same period, although the former index has been decreasing since 2008.
Korea’s enlarging difference in wealth between the classes was confirmed in other indexes tracking income trends. The Gini coefficient, a broadly-used measurement on the concentration of wealth, with zero indicating perfect equality and 1 signifying complete inequality, worsened slightly from 0.310 in 2010 to 0.311 in 2011.
Disposable income among the richest 20 percent of people was 5.73 times larger than that of the poorest 20 percent last year, indicating stronger disparity than in 2010 when the richest 20 percent earned 5.66 times more and marking the starkest gap since Statistics Korea started keeping related data in 2000.
The country's failure to plug the income gap proves that the Lee Myung-bak administration’s talk about trickle-down effects was never more than a hollow promise and highlights the public's growing frustrations.
Critics have accused the government of ignoring sharp falls in real income for most workers, which they claim has cut off an important route for economic recovery, as worsening global conditions start to kick exports in the teeth.
According to government figures, households with two or more members earned an average of 3.84 million won (about $3,400) a month last year, compared to 3.63 million the previous year. However, when factoring in inflation, the annual growth in household income last year was measured at 1.7 percent and the improvement in consumption at just 0.6 percent.
Inflation-adjusted consumption declined 0.8 percent in the three months through December, representing the first quarterly decline in two years, suggesting that deteriorating family finances are taking a bite out of the country’s fragile recovery.