Pandemic makes the poor poorer, the rich richer
The COVID-19 pandemic has widened the income and wealth gap between the rich and the poor. According to a recent report by the Bank of Korea (BOK), the discrepancy has increased as low-income people have been more severely affected by the economic fallout from the coronavirus than the rich.
The report showed households in the bottom 20 percent income bracket suffered a 17.2 percent drop in their income in the second quarter of the year from a year before. This downward trend continued in the third quarter. However, the top 40 percent saw their income rebound in the July-September period after a mere 4 percent drop in the previous quarter.
Such a divide also took place between small and medium enterprises (SMEs) and large corporations. SMEs' production tumbled 10.2 percent year-on-year in the second quarter, compared with a 3.7 percent fall for large businesses. This means the unprecedented pandemic has wrought more devastating havoc on smaller firms than on conglomerates.
The phenomenon has gone beyond national borders. The central bank said emerging market economies have suffered far greater pain arising from the global public health crisis than advanced economies. The pandemic has deepened the growth imbalance between rich and poor countries. That is why international cooperation is urgently needed to contain COVID-19 and get the recession-hit global economy back on track. But this is easier said than done. The coronavirus is resurging with no recovery in sight, although the U.S. and a few other counties have begun vaccinations.
We should take the coronavirus-triggered divide seriously. The more poor people and countries suffer from the pandemic's impact, the harder it is to get back to normal. If the gap and the imbalance worsen, a vicious cycle of shrinking consumption, job losses, falling production and a deeper recession will persist.
As things stand, President Moon Jae-in's income-led growth policy faces bleaker prospects. It has not fared well because it failed to create jobs and narrow the income gap. It is not strange to see a pandemic make the poor poorer and the rich richer. Wealthy people have made handsome gains from the overheated property market as well as the bullish stock market amid monetary easing and fiscal expansion.
It is time to expand the social safety net and promote income redistribution to narrow the widening wealth gap and social polarization. The Moon administration cannot improve the situation with an empty slogan of inclusive growth. It must work out comprehensive measures to help the most vulnerable overcome the virus shock and stand on their own.
Last but not least, the government and the ruling Democratic Party of Korea (DPK) should end their partisan struggles and political bickering with the main opposition People Power Party (PPK) and other minor parties. They need to create bipartisanship to defeat the coronavirus and improve the livelihoods of the people.
The COVID-19 pandemic has widened the income and wealth gap between the rich and the poor. According to a recent report by the Bank of Korea (BOK), the discrepancy has increased as low-income people have been more severely affected by the economic fallout from the coronavirus than the rich.
The report showed households in the bottom 20 percent income bracket suffered a 17.2 percent drop in their income in the second quarter of the year from a year before. This downward trend continued in the third quarter. However, the top 40 percent saw their income rebound in the July-September period after a mere 4 percent drop in the previous quarter.
Such a divide also took place between small and medium enterprises (SMEs) and large corporations. SMEs' production tumbled 10.2 percent year-on-year in the second quarter, compared with a 3.7 percent fall for large businesses. This means the unprecedented pandemic has wrought more devastating havoc on smaller firms than on conglomerates.
The phenomenon has gone beyond national borders. The central bank said emerging market economies have suffered far greater pain arising from the global public health crisis than advanced economies. The pandemic has deepened the growth imbalance between rich and poor countries. That is why international cooperation is urgently needed to contain COVID-19 and get the recession-hit global economy back on track. But this is easier said than done. The coronavirus is resurging with no recovery in sight, although the U.S. and a few other counties have begun vaccinations.
We should take the coronavirus-triggered divide seriously. The more poor people and countries suffer from the pandemic's impact, the harder it is to get back to normal. If the gap and the imbalance worsen, a vicious cycle of shrinking consumption, job losses, falling production and a deeper recession will persist.
As things stand, President Moon Jae-in's income-led growth policy faces bleaker prospects. It has not fared well because it failed to create jobs and narrow the income gap. It is not strange to see a pandemic make the poor poorer and the rich richer. Wealthy people have made handsome gains from the overheated property market as well as the bullish stock market amid monetary easing and fiscal expansion.
It is time to expand the social safety net and promote income redistribution to narrow the widening wealth gap and social polarization. The Moon administration cannot improve the situation with an empty slogan of inclusive growth. It must work out comprehensive measures to help the most vulnerable overcome the virus shock and stand on their own.
Last but not least, the government and the ruling Democratic Party of Korea (DPK) should end their partisan struggles and political bickering with the main opposition People Power Party (PPK) and other minor parties. They need to create bipartisanship to defeat the coronavirus and improve the livelihoods of the people.
