Korea’s per capita income recovered to the $20,000 level last year on the back of robust economic growth and the Korean currency’s gain against the U.S. dollar.
According to the Bank of Korea, the nation’s per capita gross national income registered $20,759 in 2010, an increase of $3,566 over the previous year. Korea first crossed $20,000 in 2007 when its GNI per capita reached $21,695. But it dropped below the psychologically significant level in the midst of the global economic crisis.
Last year, the Korean economy grew 6.2 percent, the fastest growth in eight years, while the Korean won appreciated 2.6 percent against the greenback.
Korea’s return to the $20,000 level is by no means a small achievement, given the International Monetary Fund’s forecast in 2009 that Korea would be able to rebound to its 2007 level by 2012 at the earliest.
The BOK said Korea would be able to boost its per capita GNI to a new high this year as the economy is likely to grow by around 4.5 percent and the Korean currency is expected to strengthen further against the U.S. dollar.
While Korea’s achievement last year deserves plaudits, it would mean little to ordinary people if the benefits of economic growth are not evenly distributed. In this respect, the worsening inequality in income distribution is cause for concern.
Last year, the share of national income that went to labor fell from 60.9 percent to 59.2 percent. Labor’s share dropped because the rate of return on capital grew at a faster pace than compensation of employees. In 2010, the operating surplus of companies increased 16.4 percent while their employee compensation grew 6.9 percent.
According to the BOK, the 1.7 percentage point drop in labor’s portion of income was the largest since the 1.8 percentage fall in 1974. Furthermore, it was the first time since 2004 that the figure fell below 60 percent. In advanced countries, labor accounts for around 70 percent of national income.
What worries us is the downward trend in labor’s income share. Last year marked the fourth consecutive year of decline in labor’s share. This trend reflects the worsening polarization in Korea between industrialists and workers and between big companies and small firms.
To address this problem, the government has launched a campaign to ensure that growth is shared between large, globalized corporations and their smaller suppliers. But this drive has not yet produced any tangible result.
Therefore, the government needs to take more bold steps to ensure a more equal distribution of income, while redoubling efforts to help the shared growth campaign bear fruit.