Three out of Every 10 Households Run a Deficit in Their Income

About three out of every 10 households are running in the red as their consumption expenditure has surpassed their disposable income. Disposable income refers to total income minus annual tax and other non-consumption expenditure.

As many as 31.9 percent of the country’s households outspent their disposable income during the first quarter of 2004, the National Statistical Office (NSO) said on June 8.

“If the households living on pensions or asset income are considered,” the NSO said, “The households which run deficits in their living expenses account for 15 percent.”

Although per-household average income rose 6.8 percent to 2.77 million won during the quarter compared to 2.6 million won during the same period of the previous year, education expenses and tax went up 17.6 percent and 13.5 percent respectively, which in turn increased consumption by 6.8 percent and complicated the balancing of the books.

As the economic recession keeps on hitting low-income households hard, on average the lowest 20 percent posted run a 450,900-won deficit per month in their average monthly surplus, which is disposable income minus consumption expenditure.

The lowest 20 percent posted 5,300 won in surplus during the first quarter of last year. However, they posted a deficit of 29,500 during the first quarter.

As for urban workers, the income gap between the upper 20 percent and the lower 20 percent brackets stands at 5.7, a three-year high since the first quarter of 2001 when the spread was 5.76.

Jong sik Kong kong@donga.com