[Ordinary People's Financial Report] Widening Wealth Gap... "Income Decreased and Debt Increased Due to COVID-19"

Shinhan Bank 'Report on the Financial Life of Ordinary People'

[Asia Economy Reporter Kwangho Lee] Last year, while the income of worker and self-employed households decreased due to the impact of COVID-19, their debt increased.

According to the "Ordinary People's Financial Life Report 2021" released by Shinhan Bank on the 20th, the average monthly income of economically active households last year was 4.78 million KRW, a 1.6% decrease from 4.86 million KRW in 2019.

The income had increased from 4.61 million KRW in 2016, when the report was first compiled, until 2019, but dropped last year due to the COVID-19 economic crisis, falling back to the 2018 income level of 4.76 million KRW.

The average monthly income of the 1st quintile (lowest 20%) households was 1.83 million KRW, down 3.2% from the previous year. The income of the 5th quintile (highest 20%) households was 8.95 million KRW, a 0.8% decrease. The income of the top 20% was 4.9 times that of the bottom 20%.

Last year, households spent an average of 2.4 million KRW per month on consumption. This accounted for 50.2% of total income, slightly up from 49.6% in 2019.

Looking at the consumption categories, the shares of food expenses (20.8% → 22.1%), monthly rent and maintenance fees (10.8% → 11.3%), and medical expenses and health supplement purchases (5.8% → 6.7%) increased, while leisure, hobbies, and entertainment expenses decreased from 8.3% to 6.3% due to the impact of COVID-19.

The average monthly household debt repayment amount increased from 410,000 KRW to 430,000 KRW over one year, and the ratio to income also rose from 8.4% to 9.0%. More than half (52.2%) of the debt repayments were for mortgage and jeonse/rent loans, while general credit loans accounted for 13.0%.

The average monthly household savings and investment amount was 1.09 million KRW, down 80,000 KRW from 1.17 million KRW in 2019. The ratio to income was 22.8%, the lowest since the survey began in 2016. Although the absolute savings amount shrank, the proportion of investment products such as stocks and funds rose from 6% (70,000 KRW) to 10.1% (110,000 KRW).

Meanwhile, Shinhan Bank has published this report annually since 2016. This report is based on a survey of 10,000 employed individuals aged 20 to 64 nationwide last year.