The income of the households in the lowest 20 percent income bracket in South Korea fell for the fifth consecutive quarter in spite of the South Korean government’s efforts for income-led growth. Specifically, their earned income fell 13.3 percent from the previous quarter in Q1 this year, when the real income growth of South Korean households dipped below 1 percent.
Statistics Korea announced on May 23 that the average monthly income of the households that are in the bottom 20 percent bracket with at least two family members was 1,254,700 won in Q1, down 2.5 percent from a year ago. The income decreased for five quarters in a row although the rate of decrease fell from the previous year’s 17.7 percent. The earned income of the households, 404,000 won, showed a decline of 14.5 percent. With the number of self-employed low-income earners increasing, their business income rose 10.3 percent and their transfer income, which is mainly government subsidies, rose 5.6 percent. Still, the rapid decline in earned income could not be offset.
The overall average monthly household income rose 1.3 percent from a year earlier in Q1. The pace of growth is the slowest since Q2, 2017, when it was 0.9 percent. The income of the top 20 percent fell 2.2 percent to cause the decline although those of the households in the second- to fourth-highest income brackets increased. The income of the top 20 percent fell for the first time in about three years.
The disposable income of South Korean households, 3,748,000 won, edged down by 0.5 percent on year. The most recent previous decline in disposable income was posted in Q3, 2009 during a global economic crisis.
The average income of the top 20 percent was 5.8 times that of the bottom 20 percent in Q1. For reference, the value was 5.95 in Q1, 2018 and 5.81 during the global economic crisis.