Poverty rate of 20s and 50s has increased

The poverty rate of the 20s who just started their career and the 50s who are subject to corporate restructuring has reportedly increased. The poverty rate indicates a portion of the population of a certain age group who make less than 50 percent of the average income. An increase in the poverty rate means an increase in the number of people in the group who earn less than half of the average wage.

According to a research on household financial welfare published on Friday by the National Statistical Office, the Financial Supervisory Service, and the Bank of Korea, the poverty rate based on disposable income increased from 9.8 percent in 2013 to 10.5 percent in 2014 for of the 20s (20 to 29), and from 12.9 percent in 2013 to 13.6 percent in 2014 for the 50s. In 2014, the average disposable income was 29.6 million won for under 30s and 48.7 million won for the 50s.

In the same period, the poverty rate for the 40s decreased by 0.7 percent from 11.3 percent to 10.6 percent.

The poverty rate based on market gain, which includes taxes and social security expenses such as national pension and health insurance (all excluded in disposable income), is 11.0 percent for the 20s and 10.8 percent for the 40s. This is the first time when the 20s’ poverty rate is higher than the 40s’ since 2011 when the first report on the matter was published.

Experts point out that the reason of the increase in the poverty rate of the 20s and the 50s is the low employment rate caused by the sluggish economy. The employment rate of the 20s in 2014 was 57.4 percent, an 0.6 percent point increase from the previous year, but still below the overall employment increase rate (0.7 percent). Especially, the increase rate in the permanent position for the 20s was only 1.8 percent whereas it was 11 percent for the 50s and 5.3 percent for the 60s, which shows that the employment situation did not improve.

The decrease in the 50s’ income is attributed by corporate restructuring and implementation of the salary peak system. “(The Ministry of Strategy and Finance) will make efforts to reduce the poverty rate by supplementing the pension system and expending the welfare investment,” said an official of the ministry.

january@donga.com