Until when should Korea let wealth gap grow wider?
Korea's income disparity is in 30th place among the 36 nations of the Organization for Economic Cooperation and Development (OECD), Statistics Korea said Thursday.
The nation's "Palma ratio," released by the government statistical agency for the first time, was 1.42 in 2015, 1.55 in 2016, and 1.44 in 2017, improving from 1.74 in 2011. It remained high among OECD countries, however. Only six countries ― the U.K., Lithuania, the U.S., Turkey, Chile and Mexico ― showed higher ratios than Korea.
The Palma ratio is a measure of income inequality. It is the ratio of the wealthiest 10 percent of the population's share of gross national income divided by the poorest 40 percent's share. The larger the ratio is, the wider the income gap becomes.
Income disparity is somewhat inevitable in a capitalist society. Adequate rewards for hard-working, high-achieving people push up economic productivity. However, if the wealth gap grows too wide, it can cause social conflict and political unrest. The resultant national chaos leads to the loss of the entire nation.
It is, of course, desirable to minimize income differences. Above all, robust economic growth increases jobs, contributing considerably to the improvement of income distribution. This is because the expansion of the income gap is due mainly to a business slump and consequent dearth of jobs. That, in turn, shows why policymakers should put a priority on boosting the sluggish economy.
It is also necessary to rectify structural problems. The widening wage gaps between large and small firms, exporting companies and domestic sellers, full-timers and part-timers and capital areas and provinces forms the backbone of income inequality. The nation needs to improve these inequities in a fairer direction. It should also monitor more closely unjustifiable privileges enjoyed by certain groups, including former prosecutors and judges, as well as rampant tax avoidance.
The nation should move forward step by step. Not only the government but also our entire society ought to have interests in solving income inequity, conceding what can be conceded and correcting what should be corrected. Most essential is to practice even small things instead of making empty slogans and announcements.
Korea's income disparity is in 30th place among the 36 nations of the Organization for Economic Cooperation and Development (OECD), Statistics Korea said Thursday.
The nation's "Palma ratio," released by the government statistical agency for the first time, was 1.42 in 2015, 1.55 in 2016, and 1.44 in 2017, improving from 1.74 in 2011. It remained high among OECD countries, however. Only six countries ― the U.K., Lithuania, the U.S., Turkey, Chile and Mexico ― showed higher ratios than Korea.
The Palma ratio is a measure of income inequality. It is the ratio of the wealthiest 10 percent of the population's share of gross national income divided by the poorest 40 percent's share. The larger the ratio is, the wider the income gap becomes.
Income disparity is somewhat inevitable in a capitalist society. Adequate rewards for hard-working, high-achieving people push up economic productivity. However, if the wealth gap grows too wide, it can cause social conflict and political unrest. The resultant national chaos leads to the loss of the entire nation.
It is, of course, desirable to minimize income differences. Above all, robust economic growth increases jobs, contributing considerably to the improvement of income distribution. This is because the expansion of the income gap is due mainly to a business slump and consequent dearth of jobs. That, in turn, shows why policymakers should put a priority on boosting the sluggish economy.
It is also necessary to rectify structural problems. The widening wage gaps between large and small firms, exporting companies and domestic sellers, full-timers and part-timers and capital areas and provinces forms the backbone of income inequality. The nation needs to improve these inequities in a fairer direction. It should also monitor more closely unjustifiable privileges enjoyed by certain groups, including former prosecutors and judges, as well as rampant tax avoidance.
The nation should move forward step by step. Not only the government but also our entire society ought to have interests in solving income inequity, conceding what can be conceded and correcting what should be corrected. Most essential is to practice even small things instead of making empty slogans and announcements.
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