Urban Household Income Plunges

Due to the sluggish economy, it was found that the average monthly income of an urban Korean household has not increased in the slightest. In particular, the real income of the lower 20% income bracket has instead decreased, according to a report.

The report released by the National Statistical Office (NSO) on May 27 said that the average monthly income of urban working households rose to 2.91 million won in the first quarter of this year, up 4.3% compared to the same period last year.

However, the rate of increase in average urban household incomes fell by half compared to 8.1% in the first quarter last year.

In addition, the real rate of income increase, which excluded 4.1%, the rate of increase in consumer prices last year, inched up 0.2% for the two consecutive quarters. This suggests that urban household income has barely increased.

The office attributed the decline to the 32.7% drop in return from assets such as interest rates and rents despite the 9.6% rise in earned incomes from companies.

Household spending jumped 4.5% to 2.3 million won compared to the same period last year. In the first quarter last year, it rose 6.8% compared to that of two years ago.

Among consumer spending, medical and health-related spending increased the most (25.1%), followed by a 12.3 percent rise in spending on entertainment and recreational activities and a 10.3% rise in traffic spending.

The income distribution ratio comparing the average income of the lower 20% with that of the upper 20% edged up to 5.47 from 5.40 last year, indicating the more widened gap between incomes in the top 20% and the bottom 20%.

In particular, the lowest 20% of the income brackets was the hardest hit with the increase rate of income 1.8%. When considering rising consumer prices, their real income shrunk by 2.3%.

Kwang-Hyun Kim kkh@donga.com