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Downturn continues to hurt the poor more than the rich
May 22, 2009
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And analysts say it’s set to widen further this year. The National Statistical Office said the Gini Coefficient, a widely used measure of income inequality, was 0.325 last year, up by 0.001 from a year earlier. A coefficient of 1 would mean the rich received all the wealth, while 0 indicates perfectly equitable income. It measures not just labor but also income from business, property and assets. According to the Finance Ministry, a score of 0.325 signals considerable inequality in income distribution. Countries over 0.35 are called “very unequal,” it said. As of 2006, Japan’s Gini Coefficient was 0.314, while the United States’ was 0.470. Experts say the increase in the coefficient last year was due to the economic crisis that began to spread during the second half. Income inequality tends to widen during a crisis because lower-income earners take the brunt of the damage, the ministry said. At the height of the Asian financial crisis in 1998, the coefficient for Korea surged to 0.295 from 0.268 the year before, while after the credit card bubble burst in 2004, the coefficient rose to 0.301 from 0.295 in 2003. Experts say the gap will grow even worse this year given the quick recovery of real estate and the stock market compared to a still struggling real economy, since property and financial products are more often owned by the rich. “A widening income disparity is a generally observed trend worldwide,” said Yoo Gyeong-joon, a researcher at the Korea Development Institute, a leading state-funded think tank. “Many experts share the opinion that if the trend is coupled with the still lackluster economic situation, the Gini Coefficient will jump further this year,” he said. The government said it is trying to help low-income families weather the storm with programs including a 1.7 trillion won ($1.36 billion) public labor project. Up to 250,000 unemployed people in low-income households will be hired as part of the program beginning next month. But the government admitted the measures will be limited in narrowing the income gap. “Because of limited resources, it’s not easy to stop the asset income disparity from widening,” said an official at the Finance Ministry who declined to be identified. By Moon Gwang-lip [joe@joongang.co.kr] |
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