[Editorial] Ignoring Poverty Won't Help Economy

The second quarter figures released Wednesday by the National Statistical Office regarding household finances reminds us of the problems that exist in our economy. Household income is at a standstill, and the income gap is back at what it was five years ago. Income among high-income families is not in any way contributing to the economy. Those are problems that will be difficult to solve with short-term stimulation measures. We need to look back at the very foundations of what has been done with the economy since the financial crisis of 1997 and find new answers.

Actual income by working urban families few only 1.6 percent compared to last year. That is far less than the 2.7 percent second quarter growth rate. One out of four households are in the red. It is hard to expect households to spend more when it is obvious their debts are going to increase. That is why actual income among low-income families has shrunk while the income gap has grown to what it was five years ago. Instead of greater extremes, the problem is essentially one of growing poverty.

The cause of the problem is that the increasingly poor quality of jobs means working income among the weaker classes in society is shrinking. Companies can increase their earnings by reducing the cost of labor by increasing the number of their irregular jobs, but it has to be seen that such an approach is shrinking the economy. The economy is stagnate, and an economy where all that goes up are stock prices thanks to higher corporate earnings cannot be called a normal one.

Better job protection for irregular workers is of the highest urgency. Granted, that could make the creation of new jobs difficult, so there needs to be flexibility regarding the wages of regular jobs. There should also be active consideration of a plan to increase unemployment allowances so as to reduce competition between workers over low income. There also urgently needs to be a plan to increase the quality of the domestic services industry, including education, so that high-income households spend money in Korea.

The Hankyoreh, 4 August 2005.

[Translations by Seoul Selection (PMS)]