Finance minister says income gap is structural

Home > Business > Economy

Finance minister says income gap is structural

Published: 07 Jun. 2018, 20:23

The deputy prime minister for the economy said Thursday that an increase in Korea’s income inequality in the first quarter of this year was a “structural issue that cannot be remedied in a short period of time.”

The remarks by Kim Dong-yeon, who is also the finance minister, came during a meeting Thursday at the Seoul government complex in Gwanghwamun, central Seoul, where high-ranking officials from the government convened to discuss possible measures to address worsening income inequality in Korea. Other officials attending the meeting included Hong Jang-pyo, president Moon Jae-in’s chief secretary for economic affairs, and Kim Soo-hyun, senior presidential secretary for social affairs.

Some commentators have said the increase in income inequality may have been caused by an increase in the minimum wage this year and companies cutting staff as a result.

“The income for low-income families in the country fell in the first quarter and the government considers this a serious issue,” said Kim. “The president ordered that the government accurately analyze the reason and come up with possible solutions, which is why we decided to hold this meeting.”

Data by Statistics Korea released last month showed that in the first quarter of this year, incomes for workers in the top 20 percent rose by 9.3 percent while incomes for the bottom 20 retreated by 8 percent, a clear indicator that the gap between the top and bottom tiers of workers widened.

“We believe one of the reasons of the widened income gap is the ageing population of the country,” Kim said. “With the population ageing rapidly and the operation of many businesses becoming more automated, employment for temporary and part-time workers are likely to further shrink.

“Because it is a structural problem that cannot be solved through a short-term solution, it requires mid- to long-term measures,” Kim added. “We must expand opportunities to work and create jobs as well as a social safety net for those in vulnerable positions.”

The finance minister said the government must bolster the safety net for the self-employed as well and help them increase their competitiveness.

According to the government, incomes for households with a wage earner – meaning a person who earns a salary from private companies or the government – increased in the first quarter whereas those of households without a wage earner – which includes both the self-employed and unemployed – fell across the board.

The meeting on Thursday was another government attempt to quell controversy over the minimum wage increase and its impact on the economy and jobs.

Statistics on both the income gap and jobs have been troubling since the minimum wage increase of over 16 percent went into effect at the beginning of the year – with the number of new jobs falling below 200,000 for the first time in a decade. While Kim said such meetings among high-ranking officials are not unusual, they are rarely opened to the public and the media as yesterday’s was.

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]