Korea At A Loss Over Inequality

All countries are unequal, but Korea seems to be among those that are more unequal than others, The Korea Times reported. And as the scourge of inequality worsens by the day, the nation appears to be at a loss in attacking the problem: Policymakers here are reluctant to introduce dramatic changes to the country’s tax and benefit systems, claiming that the risk would be a bankrupt government, while schools and businesses continue to be woefully inept at educating and training a quality workforce. The massive gulf between the society’s richest and poorest is alarming as the recent downturn provided an audacious reminder that Korea needs a growth engine other than exports. A recent study by the state-run Korea Institute of Public Finance analyzed that the richest 1 percent of Koreans control nearly 17 percent of all household income. And that was an analysis based on figures of 2006, when the stars had yet to align for the collapse of the Lehman Brothers. Considering that recessions have a proven effect of turbo-charging the growth in inequality, Korea’s concentration of wealth is likely to be even more profound now. Worsening global conditions have hit the country’s mighty exporters in the teeth, but credit-crunched consumers are unable to pick up the slack. In putting a squeeze on consumer demand, the soaring wealth gap looks to have closed the country off an important route toward recovery. Read more.