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By Yoon Ja-young
Amid steeply rising consumer prices, the economic misery index, which estimates the economic hardship of households, has climbed to its highest level in 21 years. Economists say that the government should focus on curbing food prices as much as it can as low-income households will suffer the most.
According to data released by Rep. Kim Hoi-jae of the main opposition Democratic Party of Korea, Monday, the economic misery index, which adds inflation to the unemployment rate, stood at 8.4 in May, the highest May figure in 21 years.
The index was created by economist Arthur Okun to gauge how much economic distress average households are in.
The high May index comes as consumer prices rose 5.4 percent, which is the steepest rise in 13 years and nine months, while the unemployment rate was at 3 percent.
Joo Won, deputy director of the Economic Research Department at the Hyundai Research Institute, said low-income groups will not feel that job market conditions have improved either.
“Though the unemployment rate has fallen, that only means that the number of jobless people decreased,” he said, stressing that the quality of the job matters more.
“Quality jobs are still lacking and the self-employed sector has little room to create jobs. The job market's conditions as perceived by people aren't likely to have notably improved.”
Joo pointed out that the high level of the economic misery index will make low-income households suffer more than the middle class because their real purchasing power decreases at times when food prices soar.
“The government should concentrate on curbing food prices. With heat waves or floods frequently hitting the country during the summer, the prices of items that affect people's daily lives can rise even further. The government should be prepared for this and take necessary measures, including expanding the imports of those items. However, I admit that there is no absolute solution for this,” he added.
Rep. Kim, meanwhile, criticized the Yoon Suk-yeol administration for focusing on tax cuts.
“The lives of ordinary people are on the brink of disaster due to high inflation. The Yoon administration, meanwhile, is just focusing on tax cuts for the affluent, only believing in the old theory of 'trickle-down economics,” the lawmaker said.
The administration recently unveiled its economic policy direction, which includes slashing the tax burden for the corporate sector as well as cutting taxes for owners with high-priced homes that rose during the Moon Jae-in administration.
Rep. Kim urged the government to come up with medium to long-term measures to strengthen support for the vulnerable and mitigate ongoing high inflation, including through the diversification of raw materials suppliers.