Economy stifles hopes for tapped-out middle class

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Economy stifles hopes for tapped-out middle class

The plight of Kim Byeong-cheol’s family is only one reminder of how the middle class in Korea has been under siege.

Over the past decade, the 1997 financial crisis and other economic factors such as rising housing prices have threatened the middle class, reducing its ranks substantially.

According to a recent study by the Korea Development Institute, the middle class here shrank from 68.5 percent of the population to 58.5 percent between 1996 and 2006.

What is even more worrying is that seven out of every ten people who drop out of the middle class stay in the lower income brackets of society, joining the ranks of the poor, the report says.

The institute estimates that the ranks of the poorer class increased from 11.3 percent to 17.9 percent during the same period.

The middle class usually makes up the bulk of the population in developed nations. Hyeon Jin-gwon, a professor at Ajou University who conducted an analysis of Organization for Economic Cooperation and Development member countries, said the middle class made up about 71 percent of the population in these countries.

In contrast, many South American countries that have undergone political turmoil and economic crises project a pyramid-shaped income profile of the population, with the very rich on top.

Meanwhile, the remaining members of the middle class in Korea are facing pressure from all sides.

Inflation, education expenses and job security are just some of these. Experts say the nation’s economy cannot recover unless those losing their grip in the middle class recover their economic status.

The middle classes are, after all, substantial consumers. Without their economic clout and ability to spend, many businesses here will continue to feel the pinch.

By Park Shin-hong JoongAng Ilbo []
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