Income grows by record rate boosted by government payments

Statistics Korea's head of the income statistics division Lee Jin-seok briefs on average monthly household income in the second quarter in Sejong on Thursday. [YONHAP]

Household income rose 12.7 percent year-on-year in the second quarter, a record for a statistic compiled since 2006.

The increase was largely due to Covid-19-related government subsidies, including compensation paid to small businesses. When these payments are excluded, the rate of increase was much lower, while spending power is under threat due to high inflation.

According to Statistics Korea, average household income in the April-to-June period was 4.83 million won, 544,000 won more than the 4.29 million won in the year-earlier period.

On a real basis, income grew 6.9 percent. Transfer income was up 44.9 percent year-on-year to 893,000 won, and was 18 percent of the overall average monthly income.

Transfer income from the government grew 61.5 percent. From relatives, it was up 9.2 percent year-on-year.

Labor income averaged 2.9 million won, up 5.3 percent, and business income was 927,000 won, up 14.9 percent.

Average income grew at double-digit rates in all income quintiles, with income up 16.5 percent in the lowest 20-percent income bracket. For this cohort, labor income rose 47.3 percent as more jobs became available due to the ending of social-distancing regulations.

"The compensation for business losses was roughly 21 trillion won," said Lee Jin-seok, head of the statistics agency's income statistics division.

Average household monthly spending grew 5.8 percent in the second quarter to 2.62 million won.

Spending at restaurant and hotels rose 17 percent year-on-year. One of the reasons is the base effect as people refrained from traveling and eating out during the pandemic.

Spending on culture and entertainment rose 19.8 percent to 176,000 won, while spending on education rose 11.1 percent to 166,000 won.

Spending on food fell 1.8 percent to 365,000 won. Spending on cigarettes and alcohol fell 3 percent to 38,000 won.

Spending on clothing and shoes rose 12.5 percent to 145,000 won, and spending on transportation 11.8 percent to 331,000.

Telecommunications spending rose 3.6 percent to 123,000 won.

"Last year people were busy renovating and buying up furniture as many were forced to work at home," Lee, the statistics agency director, said. "This year, such spending is considered to have been cut."

The Finance Ministry in a statement released on Thursday said it will do its best to take the edge off of rising costs, releasing government stockpiles of essential food items and handing out energy vouchers to low-income families.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]