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Income rises as inequality deepens, hurts wellbeing
By Park Hyong-ki
A 34-year-old woman, who asked to be identified only by her surname, Jeong, works in the fast-paced tech industry. It's been three years since she first started her job earning more than $30,000 a year.
But she said the higher income doesn't mean a better lifestyle.
"It's the same ― trying to make ends meet, pay monthly bills, keep moving with a busy schedule. I should feel glad though that I have a job," Jeong said.
The country is about to enter a period in which a person earns more than $30,000 a year on average, despite a prolonged economic slowdown.
Its per capita income is expected to reach that much by the end of December 2018, according to the Bank of Korea (BOK).
This is based on the estimation of the average income growth per person as of the third quarter of 2018 with the Korean won-U.S. dollar exchange rate at 1091 won.
If it surpasses $30,000, it would mark the first time in 12 years since the per capita reached $20,000 in 2006.
In 2017, the country's per capita income stood at $29,745, ranking 31st, according to the World Bank.
But analysts say, like Jeong, this does not mean the general population is better off than they were more than a decade ago.
The widening income gap and financial inequality between the rich and the poor are behind the projected increase in the annual average earnings per person.
This simply means the rich with assets such as apartments and land have mostly contributed to the rise in the average income. Apartments and land take up 80 percent of individuals' total assets here, according to KB Kookmin Bank's real estate research.
And it has not risen on the back of job creation and income growth for the low and middle classes, analysts say.
A recent statistics showed the top 20 percent group's income jumped 9 percent in the third quarter of 2018, while the bottom 20 percent one's declined 7 percent. This marked the worst income inequality in 11 years.
Analysts added it would be "inappropriate" to see the per capita income of $30,000 as a gain for the economy, given the disparity and slowdown.
"Given the situation where the country is growing and going to further grow slowly, the increase in the per capita income will not add value to the economy. In short, it has no meaning," said Sung Tae-yoon, an economist at Yonsei University.
"This is because all layers of the population will not feel the significance and benefits of the per capita income reaching $30,000 amid the growing inequality."
This reflects a survey showing one in five saying they will remain "unhappy" in the future as they were in the past. Seven out of 10 said they find it hard to climb up the social ladder.
Also, more than 50 percent said they will have no chance to get back up after a business failure. The Korea Development Institute surveyed 2,000 adults in November.
Paradox of income growth
The United Nations' 2018 World Happiness Report ranked Korea 57th among 157 countries. The country got 5.875 points.
This is considered low considering Korea's global competitiveness, which ranks 15th among 140 economies, according to the World Economic Forum (WEF). The WEF did mention in its report that Korea does not have a "positive attitude" toward entrepreneurship, which makes it almost impossible for people to take risks and start a business after a failure.
The U.N. measures a country's happiness by taking into account factors such as GDP per capita, social support systems, health and life expectancy, freedom to make choices and freedom from corruption.
The top five happiest countries are: Finland, Norway, Denmark, Iceland and Switzerland. Japan ranked 54th, and China 86th.
Analysts say as the growth is projected to further slow in 2019, inequality will worsen.
"Inequality is likely to deepen as the job market remains weak especially for low-income earners. And this will undermine confidence and consumption," said An Ki-tae, an economist at NH Investment & Securities.
He forecasts an increase of 4.5 percent in exports in 2019, down from 6.5 percent in 2018.
The BOK projects the economy to grow 2.7 percent in 2018, the slowest since 2012 when it advanced 2.3 percent.
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