Urgent action needed to address wealth inequality
Korea is witnessing a troubling rise in income inequality, with the gap between the wealthiest and the most impoverished households expanding at an alarming pace.
According to data from Statistics Korea, the income disparity between the top and bottom 10 percent of households has exceeded 200 million won ($136,000) for the first time. The average annual income of the wealthiest group is 210.51 million won, while the bottom 10 percent earn only 13.04 million won. This significant contrast marks the largest gap since such statistics were first compiled in 2017, highlighting a disturbing trend of increasing economic polarization in the country.
This growing divide is not confined to individual income. It extends to assets as well. The wealth gap between the top and bottom income brackets has surged to 1.5 billion won, further emphasizing the disparity in living standards and financial security. Despite ongoing concerns over rising inequality, little substantial progress has been made in narrowing this divide. The nation's political and economic policies have largely failed to address the root causes of this growing polarization.
The widening economic chasm is also reflected in the performance of Korea's businesses.
Large corporations continue to thrive, while small- and medium-sized enterprises (SMEs) struggle to survive. The production index for large companies rose to 114.8 in 2023, marking a 5.2 percent increase from the previous year, and the highest growth rate since 2015. In stark contrast, the index for SMEs dropped to just 98.1, reflecting a decline of 0.9 percent. This disparity not only worsens income inequality but also undermines the financial stability of workers who depend on these smaller businesses for their livelihoods.
The social and economic implications of this growing gap are severe.
As large corporations amass more wealth and power, smaller businesses and workers experience stagnant or even declining incomes. This creates a vicious cycle where the most vulnerable members of society — self-employed individuals, small business owners, and low-income workers — are left behind. If left unaddressed, this growing gap could cause irreversible damage to Korea's social fabric, fueling tensions between different classes and weakening societal cohesion.
The Yoon administration has recognized the gravity of the situation, submitting proposals aimed at tackling income and educational polarization. However, these initiatives have been hindered by political instability, including confusion surrounding a short-lived martial law declaration on Dec. 3, 2024 and the absence of significant progress in the government's 2025 policy agenda. The failure to prioritize polarization has deepened the sense of powerlessness and frustration among the public, especially within the most vulnerable segments of society.
Critics argue that the Yoon government’s policies have, in fact, worsened the divide. Measures such as easing regulations in the real estate sector and maintaining high interest rates have disproportionately benefited the wealthy while increasing the financial burden shouldered by ordinary citizens. The fallout from the martial law declaration, which dampened both consumer and business confidence, has further weakened the nation's economic stability. As a result, economic growth is expected to remain below its potential rate, while inequality continues to rise.
To prevent the situation from deteriorating further, it is essential that the government take immediate and decisive action. The priority must be to support vulnerable groups, such as small businesses, self-employed individuals, and low-income workers, who are most affected by economic uncertainties. Policies that tackle the root causes of inequality — such as soaring commodity prices, insufficient job creation, and the declining competitiveness of SMEs — should be implemented without delay. Furthermore, long-term strategies should be developed to create a more inclusive economy, focusing on improving education, job opportunities, and wage growth for those in the lower end of the income spectrum.
The government must also reconsider past policies that have worsened the divide. For example, the real estate market should be more strictly regulated to prevent speculation that drives up property prices, making homeownership increasingly difficult for ordinary citizens. Furthermore, the central bank must evaluate the impact of its high-interest rate policies on the broader economy and consider adjusting them to promote more equitable growth.
While the political climate remains turbulent, with ongoing debates over President Yoon Suk Yeol's impeachment, the urgency of addressing the income gap cannot be overstated. The growing inequality threatens to erode the very foundation of Korean society. If left unchecked, it could lead to greater social unrest and political instability, further deepening the nation's divisions. Now, more than ever, it is essential for the government and political parties to prioritize the needs of the vulnerable and take decisive action to restore balance and equity in the economy. The time for change is long overdue, and the window for action is rapidly closing.
English (United States) ·