Only the age of the householder of the lowest income bracket is in their 60s [핫이슈]

When the household trend survey for the fourth quarter of 2020 was released yesterday, interpretations poured out that the distribution of income by class had deteriorated. In fact, in the fourth quarter of last year, the lowest 20% (first quintile) earned income decreased by 13.2%. On the other hand, the top 20% (fifth quintile) earned income increased by 1.8%. Fortunately, for the bottom 20%, their transfer income increased by 16.5%, while their total income increased by 1.7%. However, even this is far below the 2.7% increase in income of the top 20%. Higher income earners earn more, while lower income earners are barely maintaining the status quo with government support.

However, there are other things to note. Only the average age of the bottom 20% of household heads is particularly high (see graph below). The age of the head of the household is 61.0 years. It must have been years since I retired from work. On the other hand, the age of householders in the second quintile was 51.8. 8.2 years younger than the first quartile. The age of heads of households in the top 20% (quintile) with the highest income is lower. 50.5 years old.

The number of household members in the bottom 20% is 2.78. I think I live with my spouse or have one more family member with no income. The average monthly earned income of these households is only 596,000 won. It’s a part-time job. Adding 279,000 won in business income also does not exceed the level of part-time work. It is difficult to make a living without government support.

What does this mean? In the end, it is likely to mean extreme poverty for the elderly. This means that many Koreans fall into the lowest income bracket when they reach their 60s as they get older, and when it becomes difficult to find a job.

In addition, the elderly population is growing rapidly. If the poverty of the elderly continues as it is now, the distribution of income in Korea will inevitably worsen. The Gini coefficient data of the ‘2020 Household Welfare Financial Survey’ jointly released by the Bank of Korea, Statistics Korea, and the Financial Supervisory Service on December 17 last year suggests that such predictions are becoming a reality.

As a result of the household welfare financial survey, the 2019 Gini coefficient, based on market income (income excluding public transfer income received from the government), decreased from the previous year in both working age groups aged 18-65 and retirement age groups over 66. This means that income inequality has improved. However, the total Gini coefficient increased by 0.002. This means that income inequality has worsened.

In each age group, income inequality has improved, but why did it worsen overall? This means that the proportion of the retirement age group over 65 to the total population has increased. It can be interpreted that income inequality has improved among the poor and elderly, but overall income inequality has worsened as the proportion of the elderly in the total population increases.

In the end, in order to prevent worsening inequality in Korea, efforts are needed to prevent falling into the poor after retirement. Of course, individual efforts are the most important. However, it should not be blamed for personal responsibility. Since prehistoric times, humans, suffering from all kinds of threats, have evolved to focus on immediate interests. The ability to look into the distant future and prepare ahead of time is poor. There is a need for a social system that helps members of society prepare for the future at the expense of short-term profits.

[김인수 논설위원]
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