S. Korea's income disparity widens at one of fastest rates
Published : 2014-06-15 10:46
Updated : 2014-06-15 10:46
South Korea's income disparity significantly widened over the past years with the gap between top and low income earners growing at one of the fastest rates in the world, data showed Sunday.
According to the state statistics office, the average monthly income of South Korea's urban households nearly doubled from about 2.1 million won (US$2,060) in 1990 to a little over 3.9 million won last year.
However, the country's Gini coefficient widened from 0.256 to 0.280 over the cited period.
Gini coefficient is one of the main measures that gauge income disparity between the haves and have-nots. A reading of zero means complete income equality, while higher numbers nearing 1 indicate a widening gap in earnings between the rich and poor.
The Gini index for the country's overall households came to 0.302 in 2013.
A recent report from the Asian Development Bank showed that South Korea's Gini index grew at the fifth fastest rate among 28 Asian countries surveyed between 1990 and 2010 after those of China, Indonesia, Laos and Sri Lanka.
The gap became more apparent between the country's top and low income earners.
In 2012, the country's top 1 percent earned more than 290 million won, which was over 17.5 times higher than the average annual salary of 16.6 million won for all workers, according to Rep. Hong Jong-haak of the main opposition New Politics Alliance for Democracy. Such a claim was based on related data submitted by the National Tax Service, he said.
Experts said a growing income gap between the rich and poor may hamper the country's economic growth.
"Once the income disparity worsens, it may weaken consumer sentiments, especially those of the middle class that has the highest propensity to spend, which in turn lead to a dip in overall economic growth," said Lee Dong-eun, an official from the state-run Korea Institute for International Economic Policy.
The International Monetary Fund, too, noted the adverse effect of growing income disparity on economic growth in its recent report, which said a large income gap will eventually lead to lower economic growth while also hindering sustainable growth. (Yonhap)