May 22, 2020 13:39
Income disparity is getting worse all the time under a government that is ostensibly devoted to "income-led growth." The income quintile share ratio, calculated by dividing the income of the top 20 percent of wage earners by the bottom 20 percent's, reached 5.41 in the first quarter. Households in the bottom 20 percent saw earnings fall 3.3 percent, while the top 20 percent's income rose 6.3 percent. Earnings in the bottom 20 to 60 percent also declined for the first time in a first quarter in 13 years. The data, released by Statistics Korea on Thursday, clearly shows that mid- to low-income jobs disappeared across the board, while high-income positions at big businesses were unscathed. The government probably blames the coronavirus epidemic, but the fundamental cause is policy failure.
The government tried to narrow income disparity by hiking the minimum wage, but that ended up ruining the livelihoods of many low-income families. This paradox was evident well before the coronavirus outbreak. Earnings in the bottom 20 percent have continually declined since 2018 with the exception of the fourth quarter of last year. The average monthly income of the bottom 20 percent plummeted 33 percent from W680,000 in the fourth quarter of 2017 to W450,000 in the same period of 2019 (US$1=W1,231). In contrast, transfer income, which includes government subsidies, rose over the same period from W520,000 to W620,000. The failed policy destroyed jobs, so the government tried to make up for the damage with taxpayers' money. As a result, low-income families made 37 percent more money from government handouts than by working. The poor are becoming more, not less, dependent on handouts.
But the government and ruling party refuse to take responsibility for the huge blunder. The head of the presidential committee overseeing income-led growth said earlier, "It has been confirmed that income distribution has improved, while jobs increased due to our income-led growth policy." Thursday's data prove the opposite. The government claims that the latest data cannot be simply compared with the old ones because they were based on "new survey methods." It had already replaced the chief of Statistics Korea with someone more to its taste because it did not like the old figures. Now it is just trying to tinker with the numbers. But it can cook the books all it likes. Everyone knows that "income-led growth" means less growth and less income.
- Copyright © Chosunilbo & Chosun.com