Our shrinking middle classThe Korean middle class has borne the brunt of three years of economic experiments by the Moon Jae-in government. Jobs in manufacturing have thinned out. Homeowners have been bombarded with heavy property taxes. Salary earners are paying more in taxes too. There is no set definition for middle class. In the past, one was in the middle class if you owned a home and car. In developed economies, one must have the luxury to enjoy leisure.
The Organization for Economic Cooperation and Development defines the middle class as people earning between 50 percent and 150 percent of the median national income. The monthly median income for a four-member household in Korea was 4.61 million won ($3,843) this year. Any household earning from 2.3 million won to 6.9 million won would fall in the middle-class. That category as a proportion of total households sank to 58.3 percent by last June compared with 60.2 percent in 2018, 63.8 percent in 2017, 66.2 percent in 2016 and 67.9 percent in 2015. At least one out of 10 households has lost its place in the middle class in less than four years.
Data cannot lie. A shrinking middle class means a shrinking economy. The future does not look much better. The economy may not even grow 2 percent this year and next. The shrinking of the middle class underscores a rapid deterioration in our economy.
Still the country’s chief executive, Moon Jae-in, claims the economy is heading in the right direction. Job additions are mostly makeshift ones for seniors, whereas people in their 30s and 40s are losing jobs. Stagnant growth means stagnation in incomes. People in their 50s and 60s are suffering too. The rationalization in appraisal value translated into staggering property tax bills. Nearly 300,000 households in Seoul saw property taxes jump 30 percent.
The bill for more welfare benefits has landed on the middle class. More people in the middle class will slide down the income ladder.
The main opposition Liberty Korea Party has attacked the government for its economic policies. It vows to bring per capita incomes to $50,000 by 2030, annual household income to 100 million won and raise the middle class ratio to 70 percent if it wins power. But such rosy numbers cannot ensure renewed competitiveness.
Politicians on both sides must remember that without the middle class, the country has no future. The government must stop being anti-market and do its utmost to strengthen the middle class. It must come up with radical actions to do so.
JoongAng Sunday, Sept. 28, Page 30