More Families Fall Below Poverty Line

Mr. Han (53), who runs a small supermarket in Sinsa-dong, Eunpyeong-gu in Seoul has witnessed his monthly take-home income shrink to less than one million won many times since last spring.

Han said, “ Until the year before last, monthly net income had reached at least 1.5 to 2 million won,” and complained, “ As the economy got worse and our customers flocked to large discount stores around the area, sales in this store has continuously declined to the point where we cannot cover the labor costs of my wife and me even though we are working hard until late at night.”

Mr. Han, whose annual income last year was slightly lower than 15 million won, is categorized as poor.

According to the date submitted on September 25 by the National Statistical Office (NSO) to Grand National Party lawmaker Choi Kyung-hwan of the Finance and Economy Committee, people living in poverty account for 18 percent of Korea’s total population. That means 2.842 million households or 8.693 million individuals are living below the poverty line.

This latest figure is up 1.1 percentage points from 16.9 percent of 2003 and increased 0.6 percentage points from 17.4 percent of 2004.

These figures indicate that an additional 257,000 households or 606,000 individuals have fallen into the category of the poor.

By using OECD (Organization for Economic Cooperation and Development) standards, the NSO classifies individuals into the poor if their monthly income is 50 percent lower than that of the median household income. (The median household income is the middle number presented in a set of data when the incomes of all households are arranged in an order of highest to lowest.)

Last year’s median household monthly income was 2.543 million won, and therefore those whose monthly income was lower than 1. 2725 million won (half of 2.545 million won) were categorized as the poor.

The rate of mid-lower class, whose monthly income is 50 to less than 70 percent higher than the median numbers, increased 0.1 percentage point to 11.9 percent in 2005 from 11.8 percent in 2003. Accordingly, during the two years, an additional 74,000 households or 10,800 individuals were newly included in the mid-lower class.

In contrast, the rate of Korea’s middle class and upper class went down.

The rate of middle class, whose monthly income is 70 to less than 150 percent higher compared to the median numbers, decreased 1.1 percentage points to 46.1 percent last year from 47.2 percent in 2003, lowering the proportion of the middle class in Korea. The number of mid-class individuals is 321,000 less than two years ago.

In addition, the rate of the upper class, whose income is more than 150 percent higher than the median numbers, has fallen 0.1 percentage point to 24.0 percent from 24.1 percent in 2003.

To this situation where the rate of middle class and upper class have shrunk while that of the poor has gone up despite the incumbent government’s recent switch of its position from emphasizing growth and welfare together to putting welfare ahead of growth, many economists point out that it is just a ‘natural consequence’.

Huh Chan-kook, a senior economist at the KERI (The Korea Economic Research Institute) said, “In a situation where the government argues that its effort to increase the benefit of welfare will make the country as an advanced nation, it is hard for corporate investment and job creation to be accomplished well and the negative burden stemming from the subsequent economic recession will fall squarely to the poor, who are forming the foundation of Korean society.

sanjuck@donga.com