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New poor increasing while middle class shrinks

Apr 19,2010
It’s generally believed that the more educated people are, the more likely they’ll get fatter paychecks.

But a recent study shows some notable changes in the demographics of Korea’s poor, and an increasing number of college graduates are in the low-income group.

According to a report titled “Organizational Characteristics of and Tasks for Korea’s Poor” issued by the Hyundai Research Institute yesterday, 12 percent of Korea’s low-income class were households with college graduates as the head of the family. Three years before, that figure was just 9 percent.

“The reasons include higher disparity in the distribution of wealth, economic recession and job insecurity,” said Lee Bu-hyeong, the head of the institute’s real economy department. “[The government] should ensure training for employment and strengthen internal stability to help the highly educated low class gain competitiveness in the job market.”

The report also challenges the assumption that if both spouses work, they are less likely to be poor. According to the report, 12 percent of Korea’s low-income group were households with both spouses working. That is almost triple the figure for 2006.

Lee explained that during a recession, more couples feel financial pressure and decide that both spouses should have jobs.

Senior citizens are also swelling the ranks of the low-income group, accounting for 43 percent last year, up from 35 percent three years before.

Hyundai Research Institute also says there are signs of a shrinking middle class, which is supposed to be the backbone of Korea’s economy.

According to Statistics Korea, 70 percent of Koreans were middle class in 2003 but last year the figure slipped to 67 percent. Meanwhile, Koreans classified as poor rose slightly during the period from 12 percent to 13 percent.

The Organization for Economic Cooperation and Development defines rich, poor and middle income through the national median income statistic.

Households with an income below 50 percent of the national median are classified as poor, those between 50 percent and 150 percent are deemed middle income and those above 150 percent are classified as rich.

Korean experts see a trend in the middle class becoming poor. For this reason, the Korean government in March last year introduced the so-called “Human New Deal,” a set of measures to support the country’s middle class.

“Just as crucial as helping those out of poverty is helping those in middle-income ranks not to fall into the poor,” President Lee Myung-bak was quoted as saying then.


By Kim Hyung-eun [hkim@joongang.co.kr]



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