More than Half of Low-income Households Are “In The Red”

It was reported that three out of 10 households in the country spend more than they earn. Especially more than half of the lowest-income 30% are suffering from red-ink living.

According to reports on household earnings and expenses in the third and fourth quarters of this year released by the Korea National Statistical Office on November 30, 27.6 percent of the all the nation’s households are now in the red, meaning they are spending more than their disposable income. The figure stood at 31.4 percent in the first quarter (January through March) of this year, fell to 27.3 percent in the second quarter, but has begun to increase since then. The reports also have it that 50.4 percent of the lowest-earning 30 percent of the nation’s households are now in the red, indicating that the small income earners are encountering great economic hardship.

Average monthly household income stood at 2.8875 million won, up by 7.3 percent from the figure during the corresponding period last year. Transfer income increased by 20.0 percent, thanks to the growing number of pension recipients.

However, real income of households inched up by a meager 2.8 percent from the same period last year, reaching 2.4979 million won.

Household expenditure on average went up by 6.8 percent from the corresponding period last year, marking 2.3287 million won. While the real income, in effect, remained almost the same, non-consumer spending such as tax, pension, and health insurance fees were reported to have increased by a whopping 13.6 percent, thwarting recovery of private spending. To be specific, the amount of direct tax payment soared 11.9 percent from the same period last year.

Among household expenditures, consumer expenditure increased by 5.7 percent. To see the figures by categories, money spent on household appliances went up by 13.5 percent with the increased purchase of air conditioners in the past summer while the clothing and footwear expenses and education fees inched up by 1.0 percent and 2.8 percent respectively.

The richest 20 percent of the nation’s households earned on average 5.8857 million won, a figure that is 7.30 times higher than the poorest 20 percent’s annual income, 806.1 thousand won. The gap is wider than the previous 7.08 percent in the same period last year, showing that the disparity between the rich and the poor has increased. This is because while the average income of the richest 20 percent in the third and fourth quarter of this year increased by 9.4 percent from last year, the figure for the poorest 20 percent showed a dismal increase of 6.1 percent.

Jong sik Kong kong@donga.com