Time to Create More Jobs, Expand Social Safety Net

No one can overemphasize the importance of the middle class in any country. It is the backbone of a democracy, acting as a safety valve. In this regard, every government across the globe is making an effort to fight poverty and beef up the median-income class to ensure social, economic and political stability. Regrettably, however, there has been slow progress in this effort.

According to a report published by the Organization for Economic Cooperation and Development (OECD) last year, 10.6 percent of people living in its 30 member states belonged to the low-income class in 2005, up from 9.3 percent in 1985. The report also noted that the disparity between the rich and the poor has widened over the 20-year period. South Korea is no exception. Official statistics said that 13 percent of the nation's total households were categorized as poor in 2008, up from 11.6 percent in 2003.

When only urban households were calculated, the ratio rose to 14.3 percent. The middle class hit a record high of 75.2 percent in 1992. But it fell to 66.8 percent in 1998 in the wake of the Asian financial crisis. And it reached the bottom of 62.7 percent in 2007 before edging up to 63.3 percent in 2008. Right after the crisis pundits warned of an expanding rich-poor gap, predicting that Korean society would be made up of 20 percent of the top class and the remaining 80 percent of the bottom class.

The prediction was undoubtedly an exaggeration. But, what it really meant was a message that the middle class would rapidly crumble because of a polarization in Korean society. In this sense, the pundits hit the nail right on the head. Why has this unwelcome thing happened despite promises by the nation's leaders and bureaucrats to fatten the middle class?

No doubt the rapid aging of the population and technological progress are the main reason behind the socioeconomic change. As a soaring number of people are 65 or older, more members of the middle class are relegated to the lower income brackets. This phenomenon will escalate social tension over who should support the elderly poor. The demographic change will also prompt a reduction in the number of the economically active population, coupled with the falling birthrates.

Technological advance and innovation has been the driving force behind what Korea is today. But it has brought about a side effect: Factory and office automation has reduced demand for human labor, thus reducing middle class jobs. That is, technological breakthroughs have accelerated the process of dividing the income brackets into highly-paid professionals and poor workers with menial jobs with the middle class falling apart.

What's more alarming is that the problem will get more serious in the future as Korea is moving faster toward an aged society as well as a tech-savvy economy. Thus it is urgent to take bolder measures to increase the middle class and narrow the income disparity. For this, the nation should go all-out to create more jobs, expand the social safety net and set out more social welfare programs to tackle the social polarization.