Income gap widening among workers

The Korea Times

The Korea Times

Finance

Sat, December 9, 2023 | 17:46

Economy

Income gap widening among workers

Posted : 2023-02-01 15:29

Updated : 2023-02-02 12:02

By Lee Min-hyung

Salaried workers' income gap has been widening over the past couple of years amid the COVID-19 pandemic, data showed Wednesday.

The National Tax Service (NTS) submitted data to the office of Rep. Jin Sun-mee of the main opposition Democratic Party of Korea (DPK) showing that salaried employees in the top 20 percent bracket earned 15.1 times more than those in the bottom 20 percent between 2020 and 2021.

The figure reached 16.3 in 2017 and fell further to 14.6 as of 2019. But the widening gap started speeding up in 2020 when the pandemic lockdown started affecting every corner of the economy.

"The government should adopt policies to reduce the gap between the income levels of each class, and help increase the overall wages of households," Rep. Jin said.

Despite the widening income gap, the range of salary increase in the bottom 20 percent bracket was bigger than that of the top group.

The average salaries of those in the first quintile rose by 12.9 percent to 98.98 million won ($80,360) in 2021 from four years earlier. But they increased in the fifth with a sharper margin of 21.6 percent to 6.54 million won during the same period, data showed.

The average income for each salaried worker here reached 40.24 million won in 2021. This was the first time in history that the figure surpassed 40 million won. In 2017, each salaried worker earned 35.19 million won on average here. Those in the top 0.1 percent bracket received an annual income of 956.15 million won in 2021.

The average salary of the upper 1 percent also came in at 317.3 million won, with the median worker earning 30.04 million won on average in the same year.

"The salary growth has been driven by the sharper income rise for the medium to low brackets which benefited most from the minimum wage hike over the past four years," Jin said.

Experts said the government should continue introducing diverse policies to reduce the household debt burden.

"To reduce the income gap, the government needs to place its policy focus on helping those with low credit ratings overcome their escalating debt burden," said Kim Dae-jong, a professor of business administration at Sejong University.

"About 30 percent of listed firms here have a tough time paying interest on loans, and small business owners also face a similar debt burden. The government is advised to continue developing support measures for such groups to alleviate their mounting financial burden in this period of steep rate hikes."

mhlee@koreatimes.co.kr