Income gap narrows to record low in 2020 on emergency cash handouts
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The income gap between the haves and have-nots in South Korea narrowed to a record low in 2020 on the back of the government's provision of emergency cash handouts amid the pandemic, data showed Thursday.
The Gini coefficient measured with disposable income, a gauge of income inequality, came in at 0.331 last year, down from 0.339 the previous year, according to the data from Statistics Korea.
A reading of zero means complete income equality, while higher numbers nearing one indicate a widening gap in earnings between the rich and poor.
The 2020 figure marked the lowest number since the statistics agency began compiling related data in 2011.
The fall came as households in the bottom 20 percent income group saw their income increase on the back of the provision of pandemic relief funds, according to the statistics agency.
In May 2020, the government doled out 14.3 trillion won (US$12.1 billion) in stimulus checks to all households to help them cope with the fallout of the pandemic. Households with four or more members received 1 million won per home.
But when the Gini coefficient is measured with income earned through wages and business operations, income inequality worsened last year as the job market remained sluggish due to the pandemic.
South Korean households earned 61.25 million won on average last year, up 3.4 percent from a year earlier.
Their income earned through wages rose 1.7 percent on-year to 38.55 million won. But households' public transfer income jumped 31.7 percent to 6.02 million won, as the government provided emergency cash handouts.
The bottom 20 percent income bracket earned an average of 12.94 million won last year, up 12 percent from the previous year. Income earned through public transfers accounted for 47.1 percent of the total earnings by the income group.
The top 20 percent income group saw its average income reach 142.1 million won last year, up 2.2 percent from a year ago.
Meanwhile, the average debt by Korean households amounted to 88.01 million won as of end-March, up 6.6 percent from a year earlier, the data showed.
The rise in debt mainly came as more households took out loans to buy homes or finance the costs for properties on lease and to invest in stocks.
Korean households had average financial debt of 65.18 million won, up 7.7 percent from the previous year.
South Korea's household debt has been repeatedly cited as the main drag on Asia's fourth-largest economy, as households' high indebtedness is feared to curb domestic demand and thus crimp economic growth. (Yonhap)