Poor Households Hit Record High Since 1998 Crisis

The Korea Times

The Korea Times

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Fri, December 8, 2023 | 09:15

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Poor Households Hit Record High Since 1998 Crisis

Posted : 2009-10-23 18:34

Updated : 2009-10-23 18:34

By Lee Hyo-sik
Staff Reporter

The numbers of elderly women and undereducated falling into poverty have risen to their highest levels since the 1997-98 Asian financial crisis.

The Korea Institute of Public Finance (KIPF) said Friday the ratio of households earning less than half the median family income reached 8.5 percent in 2008, the highest level since 1998 when the rate was 14.8 percent. Such households are generally categorized as the group living in poverty.

Last year, the median income for a four-member household was 3.54 million won per month.

By age, the poverty rates among households headed by people in their 20s and over 60 stood at 20.6 percent and 20.3 percent, respectively, substantially higher than the overall rate.

This is attributed to the higher unemployment rate among 20-somethings amid the sluggish job market, while a growing number of elderly live alone and stay economically inactive after retirement. Many senior citizens living alone rely on a minimum state subsidy.

Additionally, less educated individuals are more likely to live in poverty.

Nearly 48 percent of households headed by those without a formal education were found to be struggling to make ends meet, while about 23.7 percent of families supported by people with only an elementary school education earned less than half of the average income.

Among families headed by university graduates, the poverty rate was only 2.9 percent.

Women are more likely to grapple with financial hardship than men, with 17 percent of households headed by women in poverty, compared with the 6.6 among male-supported families.

``With deteriorating economic conditions, more and more households here are falling into poverty. Small shop owners and temporary workers are facing increasing financial difficulties,'' KIPF senior researcher Sung Myoung-jae said.

``Above all, an increasing number of senior citizens, particularly elderly women, who live alone became extremely poor as Koreans tend to live long lives but their retirement preparations are terribly inadequate,'' he added.

Sung projected the ratio of households living on less than half of the median family income will reach up to 30 percent by 2030 as a result of the nation's rapidly aging population.

``The situation is even worse in other countries with a high elderly population. For Korea, a rise in the number of poor families was mainly attributed to various economic factors until the late 1980s. But since the 1990s, the poverty rate has largely been pushed up by changes in demographics.''

Additionally, the country's Gini coefficient, a key index on wealth disparity between the rich and the poor, rose to its highest level, 0.317, in 2008. The Gini coefficient measures wealth distribution by looking at levels of salaries and financial and other assets among households. The coefficient ranges from zero to one and the closer it gets to one, the wider the income gap is.

leehs@koreatimes.co.kr