[사설] Income distribution worsens even if money is poured out, jobs are the fundamental solution

Despite the government’s release of huge amounts of money, such as disaster assistance, household income distribution in the fourth quarter of last year was worse than a year ago. The gap between the rich and the poor is widening due to income inequality. As the job market freezes due to Corona 19, the income of the lower class has sharply decreased.

In the household trend survey for the fourth quarter of 2020 released by the National Statistical Office on the 18th, the average monthly income of households in the first quintile (bottom 20%) was 1.64 million won, an increase of only 1.7% from the same period last year. On the other hand, households in the fifth quintile (upper 20%) showed an increase of 2.7% to 10026,000 won. There was a big difference in earned income. Earned income in the first quintile (596,000 won) and the second quintile (1882,000 won) decreased by 13.2% and 5.6%, respectively, while the fifth quintile (7214,000 won) increased by 1.8%.

Accordingly, the quintile ratio of equalized disposable income, an index of income distribution, was 4.72 times, which was larger than the previous year (4.64 times). This indicator is the value obtained by dividing the 5th quintile disposable income by household member by the 1st quintile, and the higher the number, the worse the distribution and the deeper the polarization between the high and low income groups. In the third quarter of last year, the quintile ratio was 4.88 times, which was significantly worse than a year ago (4.66 times).

In September-October last year, the government released the second disaster support fund, centered on the class affected by Corona 19. As a result, public transfer income increased the average monthly income per household by 1.8%. However, the growth rate of public transfer income was 17.1% in the first quintile, 25.0% in the second quintile, 26.5% in the third quintile, 33.6% in the fourth quintile, and 11.7% in the fifth quintile. The effect of government subsidies for the lowest class has fallen significantly compared to those with higher incomes. This is the result of an analysis that raises doubts about the rationality and effectiveness of the execution of disaster subsidies.

Excluding the effect of government subsidies, the quintile multiplier of the market income, including earned income, business income, and property income, was 7.82 times, which was larger than 6.89 times a year ago. The government continues to emphasize, “We will increase damage support for vulnerable industries and classes in Corona 19 and focus on’inclusive recovery’ to resolve polarization.” However, the government’s relief for them is temporary. The sharp increase in the number of low-income families who cannot work or do business is the main cause of worsening income inequality. The quarantine measures against social distancing following the corona crisis lead to damages to small business owners and self-employed first, and reduce their income and deepen polarization by removing jobs from vulnerable groups such as temporary and daily workers.

Spending money is not a skill, but increasing jobs is the fundamental solution. In January, the number of employed people decreased by close to one million from a year ago, showing the worst employment situation since the financial crisis. Last year, all employment indicators including the economically active population, employment, unemployment, and unemployment rate fell to the worst. It is difficult to expect an improvement in the distribution structure without a drastic policy change that can boost corporate investment and create decent jobs.