Poverty exit rate hits a low since ’06

A local think tank announced last Tuesday that the country’s poverty exit rate hit its lowest point last year since the group initially started research on more than 7,000 lower- and middle -income households nationwide in 2006.

In its annual report on domestic welfare patterns, the Korea Institute for Health and Social Affairs (Kihsa), a policy research organization under the Prime Minister’s Office, said that 22.6 percent of its research subjects who were in the low-income bracket in 2013 moved up into the middle-class or high-income brackets last year.

That percentage, defined as the “poverty exit rate” in Tuesday’s release, was down from 32.4 percent in 2006. The poverty exit rate in 2012 was 30.9 percent, and 23.3 percent in 2013.

A total of 7,048 nationwide households were involved in the research, half of which are in the low-income group, while the rest are middle-income families.

The middle class refers to households that earn 50 to 150 percent of the median income on the overall annual income scale. Those who earn less than 50 percent are considered to be in the lower class, while those whose earnings are higher than 150 percent would be the high-income bracket.

The median income last year was approximately 37 million won ($33,822). Among lower-class households in 2013, 22.3 percent climbed up into the middle class last year, the lowest rate in eight years; those who moved straight into the high-income brackets accounted for 0.3 percent, or about one-eighth of the 2.5 percent in 2006.

By contrast, 77.3 percent of those in the high-income group in 2012 were so in 2013, up from the 75.2 percent calculated a year earlier. Those in the high-income group in 2013 who fell into the low-income bracket last year accounted for 0.4 percent, or one-fifth of the 2 percent in 2006.

“The primary reason for poverty’s persistence is that decent jobs are diminishing in a society with a low growth rate,” said Lee Bong-joo, a professor at Seoul National University who led the study.

The number of part-time employees went up from approximately 5.6 million in 2006 to 6.1 million last year. To solve the issue, Lee suggested that the government must “go a step further from paying out living expenses to the needy, and rather focus on supporting their independence by providing jobs.”

BY LEE SUNG-EUN, SHIN SUNG-SIK [selee@joongang.co.kr]