Household incomes stay afloat thanks to gov't checks
Household incomes rose in the fourth quarter of last year thanks to government Covid relief payments.
According to Statistics Korea on Thursday, the average household income in the last three months of 2020 was 5.16 million won ($4,600), a 1.8 percent increase compared to the previous year.
That figure, however, did not include people living alone. Roughly 72 percent of the 6 million people that live alone are in low-income categories.
Regular incomes, which is defined as income from work paychecks or businesses as well as personal assets, increased 1.2 percent year-on-year to average 5.06 million won.
However, incomes from paychecks and businesses actually dropped, but were buoyed by another category of income that includes the government relief checks.
Labor incomes, which includes paychecks for jobs and accounts for 65.9 percent of the average household income, fell half a percent compared to the previous year to average 3.4 million won.
Earnings from businesses, which accounted for the second biggest proportion on 19.3 percent, dropped 5.1 percent to an average of 994,000 won.
But transfer incomes, which includes government subsidies, surged 25.1 percent to average 636,000 won. It’s even faster than in the third quarter quarter, when transfer incomes grew 17.1 percent.
The effect of the pandemic on household incomes was distinct by income bracket.
Those in the bottom 20 percent of incomes saw their average income grow 1.7 percent year-on-year to average 1.6 million won. In that category, income from jobs declined 13.2 percent year-on-year to average 596,000 won.
This illustrate job losses by people working in face-to-face businesses such as in restaurants and hotels, as well as in wholesales and retail.
Income from businesses was up 6.2 percent to average 279,000 won. Transfer incomes surged 16.5 percent to average 737,000 won. In that category, income from the government accounted for 74 percent. It grew 17 percent year-on-year.
For people in the top 20 percent average income bracket, incomes grew 2.7 percent to average 10 million won. Incomes from jobs grew 1.8 percent to 7.2 million won. Business incomes fell 9 percent year-on-year to 1.8 million won. Transfer incomes grew 36.3 percent to average 543,000 won. The sharp increase in transfer incomes in that category, however, was largely due to increases in private transfers such as allowances among family members.
Private transfer incomes grew 73.7 percent to 274,000 won on average. Transfers by the government grew 11.7 percent to average 274,000 won.
Covid-19 also affected the way households spend.
In the fourth quarter, average household spending declined 0.1 percent year-on-year to 3.89 million won.
The sharpest drop was in entertainment and culture due to the social distancing measures used to fight Covid-19.
Spending on entertainment and culture fell 17.7 percent.
The second sharpest drop was in spending on education, which fell 15.2 percent. Spending on restaurants and accommodations declined 11.3 percent while spending on fashion and shoes dropped 9.2 percent.
As more people stayed home, spending on food and beverage was up 16.9 percent, and on home appliances it was up 15.6 percent.
The job market is at its worst since the Asian economic crisis of the late 1990s.
In January, the number of employed was down 980,000 people compared to the period a year earlier. It was the largest number of job losses since December 1998.
Unemployment reached a record 1.57 million people.
Finance Minister Hong Nam-ki raised concerns in a Facebook post on Thursday but emphasized the important role government subsidies have played in bolstering household incomes.
“While labor and business incomes have shrunk, thanks to government policies including the emergency employment stabilization fund, we were able to see a 17.1 percent increase in public transfer incomes,” Hong said.
BY LEE HO-JEONG [email@example.com]