Biggest decline in earned income in history … Delving into the “K-shaped income polarization”

Korea statistics of the 3rd and 4th quarter household trend

In the ‘occupational shock’ caused by Corona

Less than 20% 550,000 won a drop of 10.7%

The richest 20% decreased by 0.6% to 7.43 million won

The employment shock caused by the new coronavirus infection (Corona 19) led to a record decline in earned income starting in the third quarter. Notably, the labor income of the weakest income quintile (the poorest 20%) was 553,000 won, a 10.7% drop from the same period last year, which was a blow. On the other hand, the earned income of the richest 20% only decreased by 0.6% to 7438,000 won. The quintile of equalized disposable income obtained by dividing the income of the richest 20% by the income of the poorest 20% is also deteriorating and the polarization of “K-shaped” income is intensifying.

According to the results of the 3rd and 4th quarter household trends survey published by the National Statistics Bureau on the 19th, the nationally earned income per household of two or more people was 3,477,000 won (-1.1 %), the biggest drop from the 2003 statistics. Due to the stagnation of self-employment, business income fell by 1.0% to 991,000 won. Labor income and business income declined for the second consecutive quarter. However, public transfer income such as government subsidies hit a record high of 29.5%, preventing a further decline.

As market income, earned income, and business income dropped dramatically, the median monthly income of households in the top quintile was 1,637,000 won, a decrease of 1.1% from a year ago, and the second quintile also decreased by 1.3% to 3,376,000 won. It is a class that has been directly affected by Corona 19, between temporary and day workers and small entrepreneurs. On the other hand, income in the fifth quintile, the richest 20%, increased 2.9% to 1,0397,000 won. The income gap between the richest 20% and the poorest 20% has increased from 4.66 times to 4.88 times.

With the disappearance of the effects of emergency aid in the event of disasters, spending, which had increased in the second and fourth quarters, has fallen again to its highest level ever. Monthly average of 2,945,000 won per household, down 1.4% from a year ago.

The average propensity to consume, which represents the incidence of consumer spending on disposable income, fell by 3.2 percentage points to 69.1%. It’s a record low in the third and fourth quarters, which means if you earn 1 million won, you’ll spend 691,000 won.

Deputy Prime Minister Hong Nam-ki and Minister of Strategy and Finance said: “I am heavy on the distribution index which reveals the difficulties of the vulnerable class due to Crown 19. As the number of crown 19 confirmed is increasing again recently, the distribution of income in the fourth quarter cannot be alleviated. ” .
/ Sejong = Reporter Hwang Jeong-won [email protected]