South Korea’s economic inequality widened over the past year, with the poverty rate showing little improvement, a report showed Tuesday.
According to statistics released by the Korea Institute for Health and Science Affairs, the country’s Gini coefficient, or Gini index, based on expenditures surged to 0.262 last year, nearly equivalent to the figure from 2009, suggesting widening economic disparity. The index reached its highest in 2009 at 0.266, with the figure gradually improving until 2012.
The Gini coefficient, developed by an Italian expert, is a statistical measure of dispersion that represents the income distribution of a country’s residents. It helps define the economic disparity between the rich and poor, with a figure nearing 1 indicating worse inequality. Zero indicates perfect equality, with a ratio over 0.4 commonly suggesting severe economic inequality.
The index based on residents’ net income recorded 0.294 last year, remaining the same on-year. The ratio remained unchanged for the first time since its gradual improvement until 2013. The ratio had peaked upon the financial crisis in 2008.
“The country’s economic disparity suggests that the social security system that is supposed to alleviate inequality has not played its full role. As of now, for instance, various welfare measures, such as national insurance packages, are not fully guaranteed for nonregular workers, compared to regular employees,” said welfare professor Han Chang-keun at Sungkyunkwan University in Seoul.
Meanwhile, last year’s overall relative poverty rate improved a little to 13.3 percent, down 0.1 percentage point on-year, according to a separate report from the institute also released Tuesday.
The relative poverty rate indicates the rate of households bringing in less than 50 percent of median earnings. It is considered the simplest way to measure a country’s level of poverty.
While Korea’s relative poverty rate improved a little, the absolute poverty rate based on market income worsened to 12.2 percent, climbing by 0.5 percentage points compared to 2013.
The absolute poverty rate represents the shares of those lacking the minimum amount of income needed to maintain the average standard of living in the country.
The absolute poverty rate improved from 2010, but has started to worsen since 2013.
Among the poverty rates, the relative poverty rate of single households showed a noticeable downturn, as the figure jumped to 47.6 percent, up by 1.5 percentage points on-year.
Single households’ poverty rate reached their highest in 2012 with 48.1 percent, but dropped to 46.9 percent in 2012.
The poverty rate of the elderly, children and job seekers all improved by an average of 0.4 percentage point to 47.2 percent, 7 percent and 7.4 percent, respectively.
By Lee Hyun-jeong (
rene@heraldcorp.com)
