Posted August. 03, 2005 03:05,
Statistics show that household income increased slightly during the second quarter (April to June) of this year, but consumption after adjusting for the inflation rate decreased overall.
According to The Trend of Household Balance revealed by the Korea National Statistical Office on August 2, the average monthly real income of households nationwide in the second quarter of this year, which reflects an inflation rate of 3.0 percent in the same period, was 2.424 million won, a 1.4 percent increase from 2.391 million won over the equivalent period of last year.
Meanwhile, real expenditures of households in the second quarter were down by 0.1 percent from 1.6516 million won last year to 1.65 million won this year.
The median monthly income and spending in the second quarter before adjusting for the inflation rate increased by 4.4 percent and 2.9 percent to 2.8517 million won and 1.9404 million won, respectively.
It Is Scary to Spend Money-
Consumers have tightened their purse stings, even cutting spending on necessary items for ordinary life. Consumption on optional items such as cigarettes, hair care, accessories, and membership fees for alumni associations was down by 6.0 percent (reflecting the inflation rate). Also, expenditures on transportation and telecommunications, food, health care, dining outs and utilities also decreased by 2.7, 2.2, 0.8, 0.6 and 0.4 percent, respectively.
The ratio of spending of disposal income in the second quarter of this year went down from 78.5 percent compared to the same period last year to 77.6 percent, which means people focused more on saving rather than spending.
Professor Kim Jong-seok of the economics department of Hongik University explained, Current consumer trends can be translated into their pessimistic view on the economy, so they tend to possess more cash.
Household incomes have not increased a lot. Last year, the real income of households nationwide in the second quarter increased 2.9 percent but recorded a mere 1.4 percent increase this year. During the same period, business incomes of households across the nation were down by 0.5 percent, exacerbating the sales environment for the self-employed. At the same time, the increase in the rate in earnings of salaried people during the second quarter registered a mere 3.5 percent, the lowest rise since the second quarter of 1999.
Income Disparity Between the Poor and the Rich Is Getting Wider-
The Korea National Statistical Office found that the average monthly income of the upper 20 percent is 5.7648 million won, which is 7.24 times more than that of the bottom 20 percent, 796.600 won, after dividing 7,291 households to five groups of 1,458 households and analyzing them.
Last year, the income of the upper 20 percent was 6.83 times more than that of the bottom 20 percent. That shows the income gap between the rich and poor has widened.
Much worse, the earning of high wage earners has surged while the income of low-income earners remains unchanged. The income of the upper 20 percent increased by 6.3 percent this year compared to last year, but that of the bottom 20 percent recorded a mere 0.3 percent increase.
Choi Yeon-ok, the employment, welfare and statistics department chief of the Korea National Statistical Office, said, It is generally known that earnings of high-income earners with professions increase more, relatively, as the economy grows.