Gulf Between Rich and Poor Wider Than Ever

The gap between rich and poor in Korea is the widest it has ever been as household debt soars.

According to Statistics Korea on Wednesday, the average assets owned by the top 20 percent of households stood at W1.65 billion or a staggering 64 times more than the W25.8 million of the bottom 20 percent (US$1=W1,322). That is the widest wealth gap since statistics began.

The Gini coefficient for assets, which gauges the level of wealth distribution, stood at 0.66, which is also a record high. The index ranges from zero to 1, and the closer to 1 the higher the inequality.

The gap widened mainly due to surging real estate prices. Some 98.6 percent of households in the top 20 percent own real estate, but the proportion stands at only 10.1 percent among the bottom 20 percent.

According to the Korea Real Estate Board, the average price of homes increased 7.47 percent from March 2021 to March 2022. The top 20 percent saw their wealth increase 9.1 percent, with the value of their real estate holdings soaring 10.7 percent.

In contrast, households in the bottom 20 percent saw their wealth decline 0.5 percent. Statistics Korea attributed the development to an increase in single households. In other words, more young Koreans who do not have a lot of money started to live alone and slipped into the bottom 20 percent in statistical terms.

According to government figures, singles owned on average just W211 million in assets last year, which is a mere 38.5 percent of the wealth owned by all households.

The average annual income of single householders was W26.9 million or a paltry 42 percent of total households'. Some 57.7 percent of their income came from wages and a mere 5.5 percent from other sources like stock investment and savings.