Text Fwd: Korea Undergoes Fastest Income Polarization in OECD

Korea Times
10-06-2009 18:04
Korea Undergoes Fastest Income Polarization in OECD
By Yoon Ja-young
Staff Reporter

South Korea has experienced the fastest income polarization among the rich OECD countries over the past decade.

The Korea Labor Institute said Tuesday that the degree of income inequality reached 4.74 in 2007, up 1.02 points from a decade ago, the biggest gain among the OECD member countries.

It suggests that the income gap between the rich and poor has been accelerating the most among the OECD countries.

The degree of income inequality is determined by dividing the labor income in the upper 10 percent by that in the bottom 10 percent. The bigger the figure, the more serious the inequality.

Poland showed the second biggest rise of 0.67 during the same period, followed by Hungary and Germany. Most countries saw the figure increase, but it actually fell in some such as France, Ireland and Spain.

Among OECD member countries, Korea ranks second only ahead of the United States in terms of unequal status. America recorded a ratio of 4.85 in 2007.

Korea also had the highest ratio of low-income workers.

The ratio of workers earning less than two-thirds of the median stood at 25.6 percent in Korea, the highest among the 18 OECD member countries cited in the report. The OECD average was a mere 16.8.

The United States, Poland, Hungary and Canada also had a high ratio of low-income workers, but they were all behind Korea.

Labor economists said the income gap has widened here since the Asian financial crisis. In 1998, the number of low-income people increased due to a tougher job market, while some affluent people could get higher income thanks to the rising value of stocks and real estate, on top of wages.

"The number of jobs has increased for the first time in seven months," said Ban Jung-ho, a researcher at the institute.

He added that a more stable and solid social welfare system was critical, when considering the inequality in income and the expanding numbers of the working poor.

chizpizza@koreatimes.co.kr