Koreans` sense of deprivation rises despite higher incomes

“I`ve given up preparing for life after retirement. I cannot give up my present life, right?”

A 36-year-old manager at a conglomerate is the breadwinner of his family and father of a son in elementary school and a daughter in kindergarten. After paying taxes and national pension, he earns 4.5 million won (4,000 U.S. dollars) each month and including bonuses, his annual salary is about 70 million won (63,000 dollars). Nonetheless, he said of his economic situation, “It would barely reach the middle-class level.”

So what income bracket does he belong to? According to data on five brackets that categorize income levels in order by 20 percent each, he belongs to the upper segment of the fourth bracket, or the second highest, which translates into upper middle class. The monthly household income of those in the fourth bracket was 4.09 million (3,680 dollars) to 5.46 million won (4,910 dollars).

○ Monthly income of 5.3 million won (4,770 dollars) deemed “mid-middle class”

The income levels that Koreans consider middle and upper class have escalated. The number of people who consider themselves lower middle class among the upper middle, mid-middle and lower middle classes has significantly increased over the past 10 years.

According to data on consumer perception and lifestyle from 2002 to last year released by Hankook Research, the average monthly household income of those who said they were in lower middle class was 2.32 million won (2,090 dollars) in 2002. That of the mid-middle class was 2.98 million won (2,680 dollars), that of the upper middle class 3.8 million won (3,420 dollars), and that of the upper class 4.53 million won (4,070 dollars).

In last year`s survey, each of the figures had risen by 80 percent. The average monthly household income of those who considered themselves low middle class was 4.18 million won (3,760 dollars), that of the mid-middle class 5.3 million won (4,770 dollars), and that of the upper middle class 6.69 million won (6,020 dollars). That of the upper class was 8.34 million won (7,500 dollars).

According to a report released in August last year by the Korea Institute of Health and Social Affairs, a third of the middle class considered themselves lower class and 80 percent of the upper class saw themselves as middle class. Kim Yoo-gyeong, a senior researcher at the state-funded institute, said, “This situation has occurred because the sense of relative deprivation that individuals feel has increased due to deepening income polarization.”

○ More than half of 30-somethings call themselves “below lower middle class”

The most notable change over the past 10 years was the perception among 30-somethings, who were found to have the deepest sense of relative deprivation. In 2002 when these people were in their 20s, 67.9 percent of them said they were above “mid-middle class” or higher. Ten years later, however, more than half (51.1 percent) of them called themselves “below lower middle class.”

One 34-year-old office worker said, “While in my 20s, I`d plan to go on overseas trips every year, and going to gourmet restaurants was something that I enjoyed very much. But now, I can hardly afford a cup of takeout coffee.”

He said he thought that landing job at a conglomerate would enable him to live a middle-class life, but his perception changed when he looked to move into a jeonse home, or a rental home based on a lump sum deposit, after getting married.

“I worked hard to save 50 million won (45,000 dollars) to repay loans for my jeonse home over the past two years, but the jeonse price has increased exactly by that amount. I`ve failed to reduce my debt at all. I can hardly afford to do things as I please, and I don’t know what I`m working for,” he said.

According to experts, Koreans in their 30s were born in an era of prosperity, feel a comparative “downgrading of their economic level,” as they cannot afford to maintain the consumption level they enjoyed as singles after marriage. Today’s 30-somethings who went to college in the mid to late-1990s are categorized as the “X Generation,” who tend to identify themselves through consumption of name brand goods.

“When children are young, there`s little difference on the surface between those from lower and middle income families because parents invest in their children more than anything else. But as they witness the gap toward friends or colleagues widen in their 20s and 30s, they naturally feel a higher sense of deprivation,” said Kwak Geum-joo, a psychology professor at Seoul National University. “Younger generations who were born in an era of consumption have a deeper sense of deprivation, and will display a ‘subjective sense of welfare” at the national level in the future.”

○ Sense of deprivation higher in Ulsan and Seoul, where income levels are higher

By region, the proportion of people who called themselves lower middle class rose most conspicuously in Ulsan and Seoul. Ulsan ranks first in average household income level in the nation and Seoul ranks second. It is interpreted that the higher the average income is, the stronger the sense of relative deprivation is.

In 2002, 56.1 percent of Ulsan residents called themselves mid-middle class, but last year, 55.1 percent of them said they are lower middle class. Those who called themselves lower middle class increased 20.6 percentage points over the past 10 years. In Seoul, the proportion of people who called themselves mid-middle class decreased 20.4 percentage points, while those who said lower middle class gained 13.4 percentage points. In contrast, the degree of change in perception was relatively smaller in Gwangju and Busan.

“An individual’s sense of relative deprivation increases when he or she makes direct comparisons with other people via the Internet or external situations,” said Seo Yong-seok, chief of the social unity research division at the Korea Institute of Public Administration.

kimhs@donga.com