Income inequality stats continue to get worseThe steep hike in the minimum wage dealt a harsh blow to small businesses, aggravating income polarization among businesses big and small, an analysis by a lawmaker with opposition Liberty Korea Party showed Tuesday.
Rep. Choo Kyung-ho used data on household incomes from Statistics Korea to look at incomes of households of two people or more led by business owners.
The analysis showed that the average monthly income of such households in the first half of the year grew by 11 percent, or 410,983 won ($364), year on year. But households in the top 20 percent income bracket earned 55.9 percent more than a year earlier. Households in the bottom 20 percent income bracket earned 440,000 won less, although Rep. Choo did not disclose a percentage decrease. Households in the second-lowest income bracket saw their income shrink 130,000 won.
Hostel and motel owners and restaurant operators were hit hardest. Businesspeople in those industries in the top income bracket saw their monthly income grow 71 percent on year in the first half. But all the rest - those in the bottom four income brackets - saw their income shrink. The bottom 20 percent, in particular, earned 1.8 million won per month in the first half of last year, which nose-dived to 670,000 won a year later, a 62.8 percent fall.
The data used in the analysis was confined to business owners or operators meeting two conditions: They have at least one employee and no other family member makes money from the business in question. When calculating the income of each household, the lawmaker excluded earnings from labor, property, transfers and non-recurring income - in other words, from outside the business itself.
“The smaller and more labor-intensive the business was, the more immense the impact of the minimum wage increase was,” said Rep. Choo.
Meanwhile, the Financial Supervisory Service (FSS) stirred controversy after it was belatedly found to have distributed a press release about the negative impact of the minimum wage hike and later released a revised version that deleted a part. The press release was entitled “Status quo of loans to private business operators in the first half of 2018,” and was published Monday morning.
The release deals with the fact that users of a special loan product called “loan 119 for private business operators,” in which 15 commercial banks extend the maturity of loans or lower interest rates for businesses stricken with financial hardship, had increased. The number of new such loans totaled 5,798 in the first half, up 40 percent year on year, and the total amount of new loans also soared 44 percent over the same period to 480.1 billion won.
Reporters are interested in those statistics given the plight of small businesses affected by the 16.4 percent minimum wage increase this year. The financial watchdog attributed the banks’ issuing of the loans to the negative effect of the minimum wage hike.
The financial watchdog re-issued a revised press release at around 6 p.m. on the same day. It did not mention the effect of the minimum wage hike.
“The minimum wage hike is the core of the government’s income-led growth policy, which is being pushed hard despite a range of controversies,” an FSS official said on the condition of anonymity.
BY JANG WON-SEOK AND SEO JI-EUN [firstname.lastname@example.org]