Korea ranks 3rd in OECD in income disparity for elderly

Korea ranks third in income disparity among those over age 65 among member nations of the Organization for Economic Cooperation and Development.

The income gap among those aged 18 to 65 is not high in Korea compared to those in major advanced economies, but many Korean senior citizens are falling into poverty due to the lack of a social safety net such as national pension.

According to the statistics released by the OECD Thursday, Korea`s Gini coefficient for those over age 65 was 0.409, third behind Mexico`s 0.524 and Chile`s 0.474. The Gini coefficient, a measure for income disparity, ranges from zero to 1 with a figure close to 1 meaning a wide income gap.

The corresponding figures for the Czech Republic (0.188), Denmark (0.218) and Norway (0.222), three countries with well-structured welfare systems, are low. Living conditions for the elderly in Turkey (0.399), the U.S. (0.386) and Japan (0.348) are better than those in Korea.

By contrast, Korea`s Gini coefficient for those aged 18 to 64 was 0.3, lower than the OECD average of 0.311. This means the income disparity among the economically active population in Korea is lower than the average income disparity of OECD countries. Chile had the highest income gap among the economically active population with 0.496, followed by Mexico (0.469), Turkey (0.403) the U.S. (0.37), and Israel 0.359).

The lack of pension systems is blamed for Korea`s high Gini coefficient for the elderly. As national pension was introduced in 1988 in Korea, the majority of senior citizens cannot benefit from the pension program.

Though the basic senior pension was introduced for low-income senior citizens, it is not enough to help the elderly poor as benefits amount to a meager 94,000 won (83 U.S. dollars) a month.

A Strategy and Finance Ministry source said, "In addition to a large number of senior citizens, a blind spot in the welfare system exists," adding, "We are making diverse efforts to resolve this problem through the realignment of measures to protect old-age income, including the promotion of private pension."

january@donga.com