Are older people to blame?Lee Ho-seung, senior Blue House secretary for economic affairs, pointed to the aging of lower income communities as a major reason for the income polarization in Korea. He came up with the strange diagnosis after a Statistics Korea survey on household income in the second quarter showed the largest income gap between the top 20 percent group and the bottom 20 percent group since 2003. In the survey, the top group earned income 5.3 times more than the bottom group. Nevertheless, citing a “considerable improvement in income distribution,” Lee praised the “most positive effect ever of government policies raising poor peoples’ income.”
Such explanation is nothing but seeing what the government wants to see. Lee seems to refuse to accept the government’s responsibility for policy mistakes. It is hard to completely dismiss the decreasing income of aging, low-income households. But aging is nothing new. It is not responsible for a senior government official to attribute income polarization to these kinds of demographic changes. Instead, he must look back and find out what went wrong with the administration’s relentless push for a so-called income-led growth policy aimed at elevating people’s income through government-enforced hikes in the minimum wage.
What attracts our attention from the second quarter survey is the lower income group’s deepening inability to stand on their feet. The group’s income, in fact, shrank by a whopping 15.3 percent. That is basically the result of a critical lack of jobs for lower income people due to the rapid wage increases over the past two years and from the fall of those in the second and third quintile groups to the first quintile group due to their failed businesses. As a result, the share of so-called transfer income of the first quintile group in their total income was even bigger than that of their earned income or business incomes.
Whenever a Statistics Korea survey shows bad signs for the economy, the government habitually attributes it to factors other than its ill-conceived policies. When unemployment worsened despite the government’ catchphrase to create more jobs, it blamed a demographic shift, and when our growth rate fell, it attributed it to worsening global economic conditions.
The government and ruling party plan to spend more than 500 trillion won ($411.7 billion) to help create an economy where everyone can live well. But if it turns away from festering problems with its economic policy, it is the same as pouring water into a bottomless pot.
JoongAng Ilbo, Aug. 27, Page 34