Rejuvenate the middle classThe middle class in countries across the world is on the verge of collapse. Amid accelerated globalization, high-income earners in specialized fields and low-income workers are on the increase. In contrast, jobs paying mid-level incomes are receding. The middle class is slipping into poverty. The forewarning of a “Global Trap,” or the fallout of globalization on civilizations by German scholar Hans-Peter Martin in 1997, may be coming true.
After the global financial crisis popped the credit bubble, the working middle class around the world faced the crude reality of frozen or lower incomes. Economies worldwide have been growing without generating jobs, due to higher productivity and IT development. Instead, jobs have gone to emerging economies that offer cheaper labor.
The job market around the world seeks either a cheap temporary or a highly-specialized workforce. The Organization for Economic Cooperation and Development alerted member governments to actively address the collapse of the working middle class. Korea, too, faces the risk, with its share of middle-class families dropping to around 50 percent in less than decade, from 60.4 percent in 2003.
Governments around the world are agonizing to come up with policies to sustain the middle class. A solid middle class ensures social security, stability and economic prosperity. But income imbalances are worsening. There is no panacea. We would have to seek a revival of the middle class as a continuous long-term strategy. The Korea Development Institute advises the government to seek ways to protect the middle class from falling into poverty.
To sustain the middle class, stable consumer and housing prices are crucial. Tax cuts and budgetary support should follow. The best solution is to address the supply of decent-paying jobs. The education and service industry should improve to increase employment. The service sector takes up a small share of the economy compared with other advanced economies. Vocational training and higher education is needed to generate a qualified workforce.
We must take the threat to the middle class seriously. The phenomenon is not a cyclical fallout, but a structural failure. If the middle class loses ground, social polarization will deepen. Elections around the world are ending in surprising outcomes due to middle class revolts. We must do everything we can to revive Korea’s middle class before a middle class rebellion strikes our country.