Debt rises and income gap widens in the pandemic

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Debt rises and income gap widens in the pandemic

Koreans are more in debt and the gap between the rich and poor is wider as a result of the pandemic, Shinhan Bank said Wednesday.
According to a survey of 10,000 economically active people conducted by the bank, the gap between the wealthiest and the least wealthy expanded last year both in terms of income and property assets.
The average monthly income of those in the highest 20 percent income bracket was 9.48 million won, up 6 percent on year, while those in the lowest 20 percent income bracket earned 1.81 million won a month, down 1 percent from the previous year.
The survey showed that the top 20 percent earned 5.23 times as much as the average worker in the lowest 20 percent in 2021. The ratio between the two groups was 4.76 in 2019.
The Shinhan report said that "the average monthly salary of workers in the lowest 40 percent income bracket hit a 4-year low, which seems to be driven by the pandemic and resulting employment insecurity."
Full-time regular employees received an average monthly salary of 4.85 million won, a 1.5 percent increase from the pre-pandemic level in 2019. Contract workers earned 8 percent less compared to 2019, at 3.37 million won a month.
The self-employed made a monthly average of 24.45 million won, continuing a downward slide for a third consecutive year. It was a 12 percent drop from 2020 (27.71 million won) and a 28 percent decline from 2019 (33.94 million won).
Of the self-employed, 70 percent responded that they are expecting a rebound this year.
Household debt loads soared over the last two years.
The survey found that 62.5 percent of households had loans last year, up by 4.2 percentage points from the previous year and a 13.9 percentage point jump from 2019.
The average amount of debt per household was 101.6 million in 2021, up 16.1 percent from the previous year.
Average property assets per household grew by 21.1 percent to 413.8 million won due to last year's price increases in the real estate market. Average assets per household increased by 18.2 percent on year to 517.9 million won.
People in the highest asset quintile owned properties worth 1.2 billion won on average. The ratio between the highest and the lowest quintile was 251, which was a huge jump from last year's 164. That ratio was 125 in 2018 and 142 in 2019.
In 2021, four out of 10 homebuyers were in their 20s and 30s, and they borrowed 167.2 million won on average to buy a property worth 364 million won.
When asked to answer how happy they are about their life, the happiest 20 percent of people had nearly 3 times more assets than the least happy 20 percent, according to the report.

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