SEOUL, May 10 (Korea Bizwire) – A new report from the Korea Labor Institute (KLI) has revealed that around four in ten South Korean independent business owners and salaried workers earn less than 10 million won ($8,820) per year, well below the average annual income.
Of nearly 26 million income earners in 2015, 38.4 percent made less than 10 million won, while 21.1 percent made between 10 million and 20 million won, and 14.2 percent made between 20 and 30 million won, according to a report on income inequality by researcher Hong Min-ki published in the May edition of the KLI monthly magazine, ‘Labor Review’.
In 2015, the top 1 percent accounted for 48.5 percent of all income generated in South Korea, giving the country the dubious distinction of ranking second in the world in income inequality, trailing only the U.S, according to the report.
Compared to Japan (41.6%), the U.K. (39.1%), and France (30.5%), the gap between the top 1 percent and the rest in South Korea is glaring.
Over seven in ten people make less than 30 million won in South Korea, while just over 23 percent reported an annual income upward of 50 million won.
Around 740,000 people make more than 100 million won per year, accounting for a mere 2.8 percent of all income earners.
Economists say the recent exacerbation of economic inequality is due to market freedom and lax regulations that were put in place in the aftermath of the Asian financial crisis in 1997, which saw the wage gap in South Korea widen, coupled with the problems of a low employment rate and longer working hours.
“In order to ease economic inequality, the social welfare system must be reformed, expanding social insurance programs to more people, and increasing social security in the form of unemployment benefits,” said Hong.