30% of households overspend

Three out of 10 Korean households were found to have spent more than they earned last year, according to data released by the National Statistical Office.

The percentage of families in fiscal deficit climbed to the highest since 2003 when the NSO began reporting household account statistics. The proportion slightly dropped to 28.8 percent in 2004 and 2005 and then regained 0.5 percentage point to 29.3 percent last year.

"The rate of households in deficit does not necessarily reflect the national economic condition or the income level because families can lavish money on weddings, or they can spend in advance expecting the economy to pick up," said an economist at a private think tank. "But there is a correlation as the increased deficit rate of low-income households led to the average rate gain amid a widening gap between the rich and poor."

More than half of the households in the bottom 30 percent income bracket spent more than they earned last year. The rate gained 0.9 percentage point from a year ago to 52.8 percent, the highest since 53.3 percent in 2003.

As for the well-to-do in the top 30 percent bracket, some 13 percent were in deficit. The upper class deficit rate continued to rise from 12.5 percent in 2003 to 12.6 percent in 2004 and 12.9 percent last year.

Nearly a quarter of the nation`s middle class saw their expenses outrunning income. The deficit rate of those in the middle income range hit 24.2 percent, up 0.2 percentage point from the previous year.

Some 23.3 percent of urban worker families posted excess expenditure. Urban households in the bottom 30 percent income bracket showed a deficit rate of 40.9 percent, down 0.3 percentage point from a year ago. Deficit rate of the top 30 percent group also dipped 0.3 percentage point to 11.4 percent. Almost a fifth of those in the middle fell into the red last year. Deficit rate of the urban middle class inched up 0.3 percentage point to 19.4 percent. Fourth-quarter figures also showed that the share of urban wage-earning families in deficit rose 0.2 percentage point to 22.5 percent.

The income gap between rich and poor households widened to a record level amid lackluster job growth and sluggish consumer spending, NSO data showed earlier this month.

The National Statistical Office said the top 20 percent of Korean households, which made on average 6.34 million won per month, earned 7.64 times more than the bottom 20 percent, which had a monthly income averaging 830,000 won last year, up 0.08 percentage point from a year earlier.

(sophie@heraldm.com)



By Kim So-hyun