World Inequality Lab: "Korea is as Wealthy as Western Europe but Faces Severe Income and Wealth Inequality"

On the 3rd, as the spread of COVID-19 continues, commuters are hurrying at Gwanghwamun Station in Seoul on their way to work. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Hyung-min] An analysis has emerged that South Korea is as wealthy as Western Europe in terms of income level, but inequality is more severe than in Western Europe.

The World Inequality Lab diagnosed the state of inequality in South Korea in this way through the "World Inequality Report 2022," published on the 7th (Korean time).

The report examined inequality levels from four perspectives: income, wealth, gender, and carbon emissions. It evaluated that the average income of the adult population in South Korea is 33,000 euros (approximately 38.43 million KRW) based on purchasing power parity (PPP) exchange rates, which is similar to Western European countries.

The income referred to here is the pre-tax amount reflecting pensions and unemployment insurance, and 1 euro based on PPP was calculated as 1,165.3 KRW.

As of 2021, the top 10% earned 153,200 euros per person (approximately 178.5 million KRW), taking 46.5% of the country's total income, while the bottom 50% earned 10,600 euros (approximately 12.33 million KRW), which corresponds to 16.0% of the total income.

The report further analyzed that inequality became significant as the Korean economy rapidly grew with deregulation in place without establishing a social safety net from the 1960s to the 1990s.

Since the 1990s, the share of the top 10% in the country's total income increased by 10 percentage points, and the share of the bottom 50% decreased by 5 percentage points, worsening inequality.

The average wealth held by South Korean adults was 179,700 euros (approximately 203.7 million KRW), more than twice the average in China and more than eight times the average in India, earning it a reputation as one of the wealthiest countries in Asia.

Wealth inequality was more severe than income inequality. The top 10% held an average wealth of 1,051,300 euros (approximately 1.225 billion KRW), accounting for 58.5% of total wealth, while the bottom 50% held an average of 20,200 euros (23.54 million KRW), accounting for 5.6%.

Based on income, the gap between the top 10% and the bottom 50% was 14 times, while based on wealth, the gap between the top 10% and the bottom 50% reached up to 52 times.