Rising income inequality in South Korea is leading to a crisis. That’s according to president Moon Jae-in, who made the claim in his state of the union address.
The country used to be hailed as a model for achieving equitable economic growth, but complaints about stagnant wages and rising living costs are now the norm.
CGTN’s Jack Barton reports.
When South Korea’s new President Moon Jae-in warns that soaring inequality could lead to a crisis, he gets a sympathetic ear in places like the port city of Gunsan.
Average incomes among the bottom 20 percent of the country have fallen more than five and a half percent since last year.
“Even though I’m working I’m worried about measures for my retirement,” says Lee Sung-hee, a seafood worker.
Younger workers like recently married Chong Hye-joo worry about having children.
“It is difficult,” she says. “Even though I have a salary, it’s always limited while the cost of living is increasing. When I’m going shopping, if I need two of something, I just buy one and think twice before buying it.”
Among the Organization of Economic Cooperation and Development (OECD) countries, South Korea is well below average when it comes to wages compared to the cost of living, and only Mexico spends less on welfare.
Many elderly people here face poverty upon retirement and so they cling to their jobs, which in turn leads to rising youth unemployment.
To compensate for all of this and the rising cost of accommodation, South Koreans have increasingly been relying on borrowed money to make ends meet.
According to Professor Kim Bowon of the Kaist Business School, “Household debt is very serious considering the OECD average is 70 percent of GDP. In South Korea, household debt is almost 90 percent of GDP.”
International Monetary Fund officials say South Korea’s income inequality is now the worst in the Asia-Pacific, with the top ten percent of the population holding 45 percent of the wealth.
Volunteer groups that help people living below the poverty line have welcomed new government initiatives to create jobs, raise pensions and wages, and provide additional social assistance.
“At this center we are helping the disadvantaged and poor,” says Lee Dong-eun of the Yongin Volunteer Center. “We are assisting those types of people, so if there is more government support we could help them more.”
The government also wants the country’s richest to pay more tax. Awareness of inequality is now also rising and action is slowly being taken to try to ensure that, while the rich keep getting richer, those struggling to make ends meet don’t fall by the wayside.