Finance:Economic inequality in South Korea
Economic inequality in South Korea is a major issue. According to data during the 2010s, low-income earners[lower-alpha 1] make up to 40% of South Korea's entire labour force. Conversely, the highest income earners[lower-alpha 2] make up only 1–1.3% of the labour force. In general, 98.7% of South Koreans make less than Template:KRWConvert annually.
This has led many South Koreans especially those of the younger generation to feel that they are not really benefiting during periods of economic growth, and have criticized the increasingly difficult socioeconomic situation and class stratification in the country, dubbing it as "Hell Joseon". They have also described themselves as being a part of the Sampo generation, whereby they have given up on courtship, marriage, and having kids due to the high costs of living and unemployment. The country also has the highest levels of poverty among the elderly in the developed world.
Moreover, much of the country's economic inequality can be attributed to the dominance of chaebols (Korean: 재벌; lit. "rich family"), which has also been seen by many South Koreans as highly corrupt and influential in the political system. Its dominance is also likely to last and engenders the risk of slowing down the transformation of the South Korean economy for the benefit of future generations.
Among other countries in OECD, South Korea lags behind in performance when considering indicators such as the Gini coefficient and Palma ratio, especially when limiting the comparison to countries with similar populations.
Income polarization (the income gap) has also not eased since the IMF stimulus, and thus is becoming more serious as of 2018.
In 2014, the poverty gap index was 40%, which ranked third overall among high income countries. According to Wells X, the nation's top-tier 1390 people monopolize assets worth around Template:KRWConvert.
In 2020, the COVID-19 pandemic has exacerbated economic inequality in South Korea. South Korea's President, Moon Jae-in, blamed the deepening wealth gap between the rich and the poor to the COVID-19 pandemic, although economic inequality was already a major problem prior to the pandemic.
The following table shows the number of people and earned income by annual salary in Korea.
|Sort||Number of People||Percentage of total workers||Earned Income||Percentage of total earned income|
|10 million won or less||4.51M||31.6%||21.0 trillion won||5.70%|
|12 million won or less||5.41M||37.8%||31.3 trillion won||8.47%|
|30 million won or less||9.90M||69.3%||123.0 trillion won||33.28%|
|45 million won or less||11.89M||91.4%||123.0 trillion won||47.15%|
|60 million won or less||13.06M||91.7%||260.2 trillion won||70.41%|
|80 million won or less||13.82M||97.4%||313.1 trillion won||84.72%|
|100 million won or less||14.09M||98.7%||337.4 trillion won||91.30%|
|Over the 100 million won||0.19M||1.3%||32.2 trillion won||8.70%|
|SUM||14.29M||100%||369.6 trillion won||100.00%|
In 2019, an article published on Xinhua claimed that the government-led economic growth policy resulted in a drop in South Korea's Gini index from 2018. However, it should be cautioned that the figure has only improved due to sluggish economic growth among high-income earners, and has had little to no effect on most of the population.
The film, Parasite, released in 2019, depicted drastic economic inequality between South Korea's wealthy and the poor. However, some argued that economic inequality is worse in places such as the United States, whereby 1% of the United States' top income earners earn 20% of the country's income, whereas the ratio is slightly better in South Korea, with 11.3% of the population earning the same percentage of South Korea's total income. However, that percentage has been decreasing in recent years, and what constitutes "top income" may have differing benchmarks in both countries.
Problems created by economic inequality
Economic polarization creates many problems, though some of the following are more evident in South Korea:
Effects on South Korean youth
Economic inequality is often linked to low or limited social mobility, a situation which may instill a sense of hopelessness among South Korea's youth. Gambling, though extremely limited due to its legality in South Korea, can be a dangerous source of debt for South Koreans who are susceptible to gambling and gambling addiction. In 2017, the easy availability of cryptocurrrency in South Korea, combined with a lack of legal outlets for gambling, has contributed to gambling problems and associated debt.
There are many causes for economic inequality, but the following causes are mainly talked about in Korea.
Corruption is a serious problem in South Korea; all four living former South Korean presidents have been sentenced to prison for various crimes ranging from abuse of authority to bribery and embezzlement; with two still currently serving their sentences.
Foreign exchange crisis
Not only the financial crisis itself, but also the ensuing contraction in domestic investment and worsening overall employment conditions. A slump in the domestic economy and strengthening the nation's economic structure dependent on exports. Before the Asian financial crisis, local companies used to make lax investments, ironically these over-investments had a positive impact on employment.
In the real economy, the imbalance of information results in reverse selection or moral hazard. The efficiency wage theory may be applied to solve the problems arising from this. Then, contrary to conventional wisdom, the phenomenon of "giving more to hardworking people than to work" occurs. It is easy to understand that there is a big difference in prize money even though the difference between first and second place is very small in a big competition. People who are confident of their own skills will prefer a competition with a big prize money because they think 'I can be number one.' It serves as a mechanism to drive out the uncompetitive and attract the competitive. In other words, in theory, the more strictly one considers who is good or bad, the more polarization can be intensified. For now, meritocracy is the clearest and most reasonable resource distribution standard in reality when there is no external pressure, so it is valid both in terms of efficiency and in terms of legitimacy. However, polarization is another matter. In other words, a legitimate society can be more polarized, and the oppositely unjust society can be called a more equal society. Simply saying that polarization is severe cannot determine that society is unjust.
In his book The Great Leveler, Schaedel said that political inequality creates economic inequality. In the book, the author said, "As the nation has historically been formed, public power has been concentrated on a few people. In terms of hierarchy, it is a very sharp spire structure. These political inequalities have encouraged economic inequality," The Republic of Korea says that economic inequality has intensified since the 1990s as well as political inequality.
In the 2016 Hanyang University dissertation, a survey was conducted on the perception of economic inequality among generations. In the paper, 70 percent of the people held the government responsible for failing to narrow the income gap. So many modern people say that the current government's policy inequality is not helping to bridge the gap between the rich and the poor.
The poverty of low-income people is getting worse due to the long-term deterioration of employment in South Korea. Therefore, the government has tried to increase employment every time over the past few years, but no results have been made yet. In an article published in the 2018 Korean Times, the IMF said Korea's income inequality was the poorest among 22 Asian-Pacific countries. In this article, the nation's economic growth is growing fast, but it also talked about inequality in household income due to the difficulty of finding jobs for young job seekers.
To bridge the gap between the rich and the poor, a universal social safety net needs to be established. However, South Korea's share of government spending on welfare is among the lowest among OECD countries, and the country is not considered to be a welfare state.
A 2018 Korea University degree paper conducted a study on how social welfare policies improve economic inequality. The paper says that Korea's economic inequality was 6.6 times different during the 1990s, but since 2009, it has been more than 10 times different. The universal concept of social welfare was becoming increasingly prominent in the 21st century as economic inequality continued to rise. The paper said that it is necessary to reduce the desire to work as much as possible by increasing the cost of welfare while providing universal welfare, but by dividing the income class differently.
- Bacchus Ladies
- Hell Joseon
- Prostitution in South Korea
- Poverty in South Korea
- Suicide in South Korea
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Original source: https://en.wikipedia.org/wiki/ Economic inequality in South Korea. Read more