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Korea's middle-class surplus income hits lowest point in five years

Published: 24 Mar. 2025, 11:54 Updated: 24 Mar. 2025, 17:16

School buses parked in front of an English-language kindergarten in Gangnam District, Seoul. [YONHAP]

The surplus income of Korea’s middle-class households — defined as those in the 40th to 60th income percentile — dropped below 700,000 won ($522) in the fourth quarter of 2024, marking the lowest level in five years.

Data released Sunday by Statistics Korea showed that the surplus income of households in the third quintile stood at 658,000 won, down 88,000 won from the same period a year earlier. This is the lowest level since the fourth quarter of 2019, when it was 653,000 won. It is also the first time in five years that the figure has fallen below the 700,000-won mark.

Surplus income refers to the amount remaining after deducting both consumption expenditures — such as spending on housing, food and clothing — and nonconsumption expenditures like taxes and interest payments from total household income.

While total household income has risen, increasing costs related to home purchases, interest payments and education have significantly impacted surplus income.

Just four years ago, middle-income households had a surplus exceeding 900,000 won, but the figure has sharply declined since the end of the Covid-19 pandemic.

The drop in surplus income is largely attributed to increases in both consumption expenditures — particularly on health care, transportation and education — and nonconsumption expenditures such as interest payments and property-related taxes.

In the fourth quarter of 2023, nonconsumption expenditures for middle-income households reached 777,000 won, a 12.8 percent increase from a year earlier. This is the highest amount and largest on-year increase since Statistics Korea began compiling income and expenditure data together in 2019.

Interest payments alone rose 1.2 percent to 108,000 won, exceeding 100,000 won for the first time in four quarters.

The surge in one-time property-related taxes, including acquisition and registration taxes following home purchases, contributed to a sharp rise in non-regular taxes. These jumped nearly fivefold to 55,000 won, up 491.8 percent on year.

Education expenditures also climbed. Middle-income households spent 145,000 won on education in the fourth quarter, up 13.2 percent from a year earlier. This increase far outpaced the average 0.4 percent rise in education spending across all households.

Translated using generative AI and edited by Korea JoongAng Daily staff.

BY JEONG JAE-HONG [[email protected]]