Subscribe
E-Paper
 |
By Park Hyong-ki
The income gap between the rich and the poor has narrowed as the government pushed to boost financial support for the bottom 20 percent.
This is also because the monthly income of the top 20 percent dropped in the first quarter of this year, the first fall in 13 fiscal quarters.
The average monthly income of the bottom 20 percent group was 1.25 million won ($1,050) in the first quarter of 2019, down 2.5 percent from a year earlier, according to Statistics Korea, Thursday.
The group's income has dropped for five consecutive quarters.
But the finance ministry said the decrease rate of its average income has been shrinking, noting that it fell nearly 18 percent in the fourth quarter of last year, and 7 percent in the third quarter of 2018.
Meanwhile, that of the top 20 percent was 9.93 million won, down 2.2 percent in the same period ― the first drop since the fourth quarter of 2015.
"This is because this top group earned less in incentives compared to a year ago amid an economic slowdown," said the state-run statistics agency's Park Sang-young.
As a result, the ratio, measuring the inequality of income distribution, fell to the wealthiest group earning 5.8 times more than the poorest group, the first drop in four years, according to the finance ministry.
It stood at 5.95 times in the first quarter of last year, and 5.35 in the first quarter of 2017.
"The rise in the minimum wage and an increase in childcare allowances have boosted mid-income earners and helped reduce the decrease rate of the bottom 20 percent income," Finance Minister Hong Nam-ki said at an economy-related meeting in Seoul, Thursday.
Hong added he will work with other ministries to help stabilize and increase the income of the bottom 20 percent through social security and job creation.
Analysts say the minimum wage hikes came with a consequence of hurting employment in the self-employed sector, which accounts for more than 20 percent of total jobs.
"The wage hikes came too fast without considering the importance of the self-employed. However, this was understandable given that any government would want to rapidly achieve its goal while its approval rating is high," said Sun Dae-in, an independent economist who heads SDInomics.
To this end, the weakening job market has led the overall households' average disposable income to fall in the first quarter for the first time since March 2009.
It fell 0.5 percent, according to Statistics Korea.
The Organization for Economic Cooperation and Development (OECD) said the job market improved in the first quarter, but most jobs were in social services backed by government spending.
