Household Business Income Declines for 5 Consecutive Quarters Amid Self-Employed Recession... "Middle Class Shaken"

Average Monthly Business Income 8.916 Million KRW... Down 2.2% Year-on-Year
Income Decline Larger in 3rd to 5th Quintiles "Income Decrease for Self-Employed with Employees"

[Sejong=Asia Economy Reporter Kim Hyunjung] Due to the impact of minimum wage increases and economic downturns, the earnings of self-employed individuals with employees have decreased, leading to a decline in business income per household in South Korea for five consecutive quarters.

According to the "2019 4th Quarter Household Trends Survey (Income Section)" released by Statistics Korea on the 20th, the average monthly business income per household among all surveyed households was 891,600 KRW, a 2.2% decrease compared to the same period last year. The downward trend in business income has continued for five consecutive quarters since the 4th quarter of 2018. This is the first time since statistics began in 2003 that business income has declined for five consecutive quarters.

In particular, the decrease is more pronounced among the middle class and above, who relatively have higher incomes. In the 4th quarter, the business income of the lowest 20% income group (1st quintile) was 231,400 KRW, up 6.5% from the previous year, and the 2nd quintile, representing the lower 40%, was 660,500 KRW, increasing by 24.7% during the same period. Conversely, the business income of the top 20% (5th quintile) was 1,719,300 KRW, down 4.2% from a year earlier, while the 3rd and 4th quintiles recorded 810,500 KRW and 1,035,400 KRW respectively, sharply decreasing by 10.9% and 7.0% compared to last year.

In contrast, total income including earned income, property income, transfer income, and non-recurring income increased across all quintiles, recording 4,771,900 KRW, a 3.6% increase compared to the same period last year.

Regarding this, Eun Soonhyun, Director of the Social Statistics Bureau at Statistics Korea, explained, "Overall, if we consider that self-employed individuals with employees are likely to belong to the 5th quintile, factors causing their continued poor performance have had an impact." He added, "In the case of the 4th quintile, the effects of business downturns and a slight decrease in the proportion of self-employed households are mixed." He further stated, "For the 1st quintile, the increase appears to be more due to the boom in certain sectors such as food and accommodation rather than an increase in the proportion of self-employed households," and "The 2nd quintile is also influenced by changes in the proportion of self-employed households."

However, it is not precisely known whether this decrease in business income has caused a downward shift in income quintiles. Director Eun explained, "In the cases of the 4th and 3rd quintiles, since the number of self-employed households and business income have both decreased, it is difficult to accurately determine whether there has been a shift in quintiles."