One in Five Households Earns Less Than 2 Million Won Per Month

Households with Monthly Income Below 1 Million Won Account for 8.5%
Deficit Widens Amid High Inflation

One in five households in South Korea was found to have a monthly average income of less than 2 million won.

According to the Household Income and Expenditure Survey by Statistics Korea on the 26th, the proportion of households with a monthly average income below 2 million won in the fourth quarter of last year was 19.77%.

The proportion of households earning less than 1 million won was 8.50%, and those earning between 1 million and 2 million won accounted for 11.27%. The monthly wage based on last year's minimum wage (9,160 won per hour) was 1,914,440 won (based on 209 hours).

During the same period, the monthly average income of the bottom 20% income households increased by 6.6% compared to a year earlier, more than twice the growth rate of 2.9% for the top 20% income households. The equivalized disposable income quintile ratio, which shows the income gap between the first and fifth quintiles, was 5.53 times, down 0.18 points from a year ago.

Although income distribution has improved, it is interpreted that a considerable number of households still earn incomes around the minimum wage level.

By the age of the household head, households earning less than 1 million won had an average age of 61.20 years, and those earning between 1 million and 2 million won had an average age of 59.16 years, which was higher than other income brackets such as 2 million to 3 million won (51.56 years) and 4 million to 5 million won (49.89 years).

In terms of household size, the lower the income, the fewer the number of household members. Households earning less than 1 million won had an average of 1.31 members, those earning 1 million to 2 million won had 1.53 members, 2 million to 3 million won had 1.77 members, and 3 million to 4 million won had 2.08 members.

Due to high inflation, consumption expenditure increased, resulting in a larger deficit. In the fourth quarter of last year, households earning less than 1 million won spent 1,092,429 won on consumption, far exceeding their disposable income of 483,339 won, running a monthly deficit of 609,090 won. Households earning between 1 million and 2 million won also recorded a deficit of 162,333 won, with disposable income of 1,293,009 won and consumption expenditure of 1,455,341 won. In the fourth quarter of 2021, households earning less than 1 million won had a deficit of 581,851 won, and those earning between 1 million and 2 million won had a deficit of 38,900 won.

Disposable income refers to the income remaining after deducting taxes and social security contributions from total income, meaning the income that households can freely use for consumption expenditures excluding transfers within the household.