[Column] Are Koreans really that much better off than they used to be?

Posted on : 2022-01-08 09:34 KST Modified on : 2022-01-08 09:34 KST
Korea is set to overtake Japan in terms of per capita GDP within the decade — but does that figure mean Koreans are living that much better?
Cho Ki-weon
Cho Ki-weon
By Cho Ki-weon, international news editor

According to World Bank figures, South Korea’s per capita nominal gross domestic product (GDP) in 2020 was US$31,631. This marks a 200-fold increase from 1960, when the figure stood at just US$158.

During this period, the global average GDP increased about 24-fold from US$457 to US$10,910, so Korea’s performance stands out. What’s more, South Korea’s GDP per capita in 2020 had nearly tripled from its standing a mere 19 years ago, when it was US$11,561 in 2001. Although there are slight differences in figures depending on which institution compiled them, Korea’s GDP per capita generally is listed in the top 30 countries and regions.

Recently, there have been several reports comparing Korea’s per capita GDP with that of neighboring Japan. At the end of last year, the Nikkei newspaper, citing data from the Japan Center for Economic Research, predicted that Japan’s per capita GDP would be surpassed by that of Korea in 2027 and Taiwan in 2028.

If calculated using the purchasing power parity exchange rate, which represents the real purchasing power of a currency, Korea’s per capita GDP (US$43,319) was already higher than that of Japan ($41,732) in 2020. Reports pointing to such a phenomenon have made news occasionally in Japan in recent years, and it seems that after the collapse of the economic bubble in the early 1990s, the Japanese economy has been in a long-term recession. There also seems to be frequent internal analyses of recent income stagnancy in Japan.

GDP per capita is an important metric that provides a glimpse into individual income growth. In the face of an explosive increase in national income, dramatic changes in lifestyles have become apparent. In the wake of the period of rapid economic growth following WWII, televisions, washing machines, and refrigerators — referred to as the “three sacred treasures” — became commonplace for Japanese families, completely changing the daily lives of ordinary people.

Although feelings of nostalgia may be mixed, many recall that during the period of rapid post-war economic growth, life was richer than before, and people widely expected that quality of life would only ever get better. Similar changes took place in Korea, Taiwan, and China.

Statistics show that the average income of Koreans has been increasing over the past decade. Looking at the change in average monthly wage income according to figures provided by Statistics Korea, wages increased from about 2.56 million won in 2011 to 3.01 million won in 2020 — or US$2,128 to US$2,502. In recent days, however, these growth numbers don’t seem to fill people with the same excitement. This is perhaps because people do not feel that their lives are becoming that much richer.

Other indicators related to the quality of life, however, show a darker trend. According to Statistics Korea, the suicide rate among Koreans was less than 15 per 100,000 population until 1997. Even when these figures increased in the wake of the 1997 Asian financial crisis, the numbers never showed a significant decline even after the crisis.

In 2020, 25.7 people per 100,000 population took their own lives in South Korea. This marks the highest figures among nations belonging to the Organisation for Economic Co-operation and Development (OECD).

Except for Korea, Lithuania is the only member country with more than 20 suicides per 100,000 population annually.

Moreover, Korea also ranks poorly when it comes to the gender wage gap. According to OECD statistics based on the median wage gap between men and women, South Korea ranks dead last among the 28 countries surveyed.

Furthermore, according to the World Inequality Report 2022 published at the end of last year by the World Inequality Lab, the average income of Korean adults is comparable to that of Western Europeans, but inequality in Korea is far worse. In fact, the report noted, inequality in Korea mirrors that in the US.

The report also points out that Korea’s rapid industrialization and economic development in the period between the 1960s and 1990s took place in the context of weak social safety nets, a liberalized economy, and deregulation.

It is thus becoming increasingly difficult to be happy with numerical upticks in Korea’s per capita GDP, given all these other less positive indicators.

Please direct questions or comments to [english@hani.co.kr]

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