Working Class Standard of Living Falls

Next year’s budget for basic livelihood security will increase 22.2 percent to 5.4 trillion won. The budget for social employment and childcare support will increase as much as 72 percent and 52.3 percent, respectively.

Government expenditures for basic livelihood protection and social employment provisions have been on the rise each year since the Kim Dae-jung administration (1998-2002). However, the livelihood of those in lower income brackets, the beneficiaries of the budget spikes, has not been much improved.

According to the National Statistical Office, the real disposable income of the lower 20 percent of urban workers shrank 2.1 percent in 2003, and 2.2 percent again in 2004. It kept descending in the first and second quarter of this year by 0.3 percent each.

A decrease in real disposable income, which is real income after accounting for inflation and after non-consumer spending deductions, demonstrates the standard of living of lower-income families is getting worse.

The total real disposable income of the urban workers has increased a mere one percent or so annually over the same period.

Outstanding utility bills are filing up, which can be interpreted to mean that the ordinary people’s livelihood is threatened.

Unpaid rent for public housing amounted to 1.739 trillion won as of end of March this year, an increase of 20.7 percent from the end of last year. Arrears for city gas bills as of end of June has risen 71.7 percent to 198 billion won, and those for water charges stand at 43.2 billion won, a 4.6 percent spike.

Households whose power supplies were cut off due to unpaid bills numbered 4,827 as of end of May, a four-fold increase from 1,091 at the end of last year. Families whose water supply was suspended amounted to 11,829 as of the end of June. The number is down from last year’s 21,067, but still higher than those of 2001 and 2002.

In addition, 5.3 percent (793,000) of the total vehicles in the country were found not to be insured for automobile liability insurance as of end of March, an increase of 50,000 cars compared to last year’s 5.1 percent (743,000).

“Most uninsured car owners are self-employed businessmen who have one car for business purposes,” said an official of the Ministry of Construction and Transportation. “They petition us to remit the fine, saying their businesses are down so they can’t afford the insurance.”

“After the financial crisis, we raised the budget for welfare to strengthen the social safety net, but the system to spend the money has not been fully established yet. How to improve the system is an issue we have,” said Lee Chan-woo, director of the welfare price policy division at the Ministry of Finance and Economy.

“Building a reliable system is a prerequisite for welfare policy,” said Kim Jae-jin, a researcher at the Korea Institute of Public Finance. “We should have the income information of welfare beneficiaries, guarantee transparency of the implementation process, and build a system to effectively distribute the budget.”

koh@donga.com legman@donga.com