Data released last week showed more households in the country have gone into debt in recent years, with their income having stagnated.
Nearly 30 percent of households without borrowing from banks in 2012 have since become indebted, according to an analysis by the national statistics office.
The increase in the number of indebted households is attributed partly to lower interest rates and eased regulations on lending. But most households are also struggling with stagnating income.
According to figures from the central bank, the gross national income increased by a meager 0.3 percent from three months earlier in the third quarter of this year. This represented the slowest rate of growth in 2 1/2 years.
In conjunction with the stagnated GNI, wages, which account for the largest part of household income, have barely increased. Separate statistics from the Bank of Korea and the Ministry of Employment and Labor showed real average monthly wages earned by local workers rose by a negligible 0.08 percent during the July-September period. The pace of increase in real wages has slowed down for six consecutive quarters.
Over the years from 2011 to 2013, more than 3 million people fell into relative poverty, with their households earning less than half of the median income, which stood at 20.24 million won ($18,000) in 2011, according to the analysis by Statistics Korea.
It is notable that elderly people’s livelihoods have deteriorated more steeply. The proportion of householders aged 60 or above who have tumbled below the poverty line in the cited period amounted to 15.8 percent, more than double the figure for householders in all age groups.
The recent string of data increases the need to implement measures to help boost household income. The situation should be avoided wherein stalled income continues to dampen domestic consumption, which in turn hampers economic recovery, making the livelihoods of low-income families more difficult.
Indeed, the economic team led by Finance Minister Choi Kyung-hwan has pushed for a set of policies aimed at increasing household income, including the introduction of a tax on the piled up cash reserves of large corporations to prod them to pay more wages and dividends. But this policy drive has recently been mixed with some contradictory proposals regarding labor reforms.
The government needs to be more consistent and persistent in carrying out measures to help boost household earnings. It is necessary to focus on ensuring that low-paid workers earn more and lift themselves out of poverty. The scheme of matching a cash bounty from state coffers with earned income should be completed to a larger extent. This will help prevent elderly people from plummeting into poverty as a growing number of them seek to work after retirement and mostly end up with landing low-paid jobs.
Expanding support for low-income earners trying to work and improving their living standards will be a cost-effective way of strengthening our social safety net.
