South Korea’s middle class is shrinking, according to recent report

Posted on : 2015-02-13 16:13 KST Modified on : 2019-10-19 20:29 KST
Compared to 1990, now more households are university-educated, yet more have fallen into the low-income class

Middle class families accounted for 7.65 million out of 11.4 million South Korean households in 2013, or 67.1%, a recent report shows.

The average profile for a middle-class household that year was a three-person family with dual-income, university-educated parents in their late forties.

The numbers contrast with those from 1990, which showed 75% of families to be middle class, with an average of four members, a single income, and a high school-educated head of household in his late thirties.

A report on changes in middle class quality of life published on Feb. 12 by the Hyundai Economic Research Institute showed a decline from pre-2000 levels in the percentage of South Koreans identified as middle class, the major consumers in the national economy and the key segment for stable economic growth.

Using microdata from Statistics Korea surveys on income trends for urban households of two or more people, the institute analyzed the percentage of actual households in the middle class between 1990 and 2013. The number rose from 4.86 million in 1990 to 7.65 million in 2013, for an annual rate of increase of 2% over the 23-year-period.

The rate was relatively small compared to other income segments, with the total number of households rising by an annual average of 2.5% from 6.47 million to 11.4 million over the same period. The largest increase was observed for the number of low-income households, which rose by an annual average of 5.4% from 490,000 to 1.63 million. The number of high-income households increased from 1.13 million to 2.12 million, for an annual average of 2.8%.

The numbers suggest that many formerly middle class families have declined to low-income status.

For the analysis, the middle class was defined as the segment earning 50% to 150% of the median equivalised disposable income (taking into account household size), which is the standard used by the Organization for Economic Co-operation and Development (OECD). For 2013, the standard would define a four-person household as middle class if its monthly disposal income fell between 1.93 million and 5.79 million won (US$1,750-5,260), with a median value of approximately 3.86 million won (US$3,510).

The average middle class family, taking into account the predominant household characteristics at the time, consisted of four members in 1990, with a single-income, high school-educated head of household in his or her late thirties. As of 2013, the average was a three-person family with two

The average reflects a decline in middle school family size from four members on average in 1990 to 3.4 in 2013, along with higher head of household ages - 48 in 2013, compared to 38.2 in 1990.

The percentage of heads of household with at least some university education also rose from 20.1% in 1990 to 46.5%, or nearly half, in 2013. Another sharp rise was observed in the percentage of dual-income families, which jumped from 15.1% to 37.9% over the same period.

With early retirement on the rise, the percentage of middle class households with an unemployed head climbed from 2.2% in 1990 to 8.5% in 2013.


By Cho Kye-wan, staff reporter


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