Income disparity deepens
The poor bear brunt of COVID-19 pandemic
Low-income earners suffered the most from the economic fallout from the COVID-19 pandemic, according to a report released Monday by the Bank of Korea (BOK). The central bank’s report noted that people in the bottom 20 percent of the income ladder saw their earnings tumble 17.1 percent year-on-year during the nine months from April 2020 when the country began to feel the virus shock.
Their loss was far higher than the 1.5 percent fall experienced by those in the top 20 percent income bracket. Those in the second and fourth quintile groups recorded income declines of 5.6 percent and 2.7 percent, respectively, while the median 20 percent saw a 3.3 percent drop. The average income of the lowest 10 percent was 5.9 times less than that of those in the middle income bracket, compared with 5.1 times the year before.
The most severely hit people were temporary and day laborers as well as working moms who lost their jobs or endured a drastic cut in their income in the aftermath of the coronavirus outbreak. This means that the most vulnerable and underprivileged people have borne the brunt of COVID-19, while middle- and higher-income earners have fared well relatively.
The report found that the unprecedented public health crisis widened the income disparity between the rich and the poor even further. The wealth gap has also deepened due to soaring home prices and bullish stock markets. Simply put, the poor have become poorer while the rich have become richer. One may say that such a trend is inevitable as it is a global phenomenon following the spread of COVID-19. Nevertheless, it is difficult to ignore the seriousness of the polarization which could destroy social cohesion.
As the BOK pointed out, the government should hammer out bold measures to avoid a widening of the income disparity with no end of the pandemic in sight. If COVID-19 persists for a longer period, the polarization will be aggravated more because additional job losses and wage reductions are inevitable. So it is necessary to provide more relief funds to the severely-battered people, including the self-employed and small business owners. It is equally important to expand the country’s social safety net.
On Monday, President Moon Jae-in entered his fifth and final year in office. He should not forget his promise to be a job creating president. There is no better welfare policy than offering more jobs to the people. He must keep his promise to supply sufficient coronavirus vaccines to achieve herd immunity by November. Without defeating the pandemic, the nation cannot get back to normal.
Most of all, Moon must double down on speeding up the economic recovery and promoting inclusive growth to enable people to enjoy a fair share of the economic pie. Only then can the nation narrow the income and wealth gap. Now is the time to take action before it is too late.