4 in 10 Middle-Class Earners Saw Incomes Shrink — Worst in 4 Years

Four out of 10 middle-class earners saw their labor and business incomes decline last year. The proportion of those with shrinking incomes was the highest in four years since the COVID-19 shock hit in 2020.

According to 2024 income mobility statistics released by Statistics Korea (National Data Agency) on Monday, 38.9% of individuals who belonged to the third income quintile based on labor and business income in 2023 saw their incomes fall the following year — the highest level since 2020 (41.2%). The decline rate had fallen for three consecutive years, from 38.6% in 2021 to 35.8% in 2022 and 35.2% in 2023, before reversing course in 2024 with a 3.7-percentage-point rise. The share of those whose incomes fell by 50% or more came to 12.8%, up 0.5 percentage points from the previous year.

The proportion of those whose incomes increased stood at 57.3%, the lowest since 2021, when it fell 5.7 percentage points from 63.0% the previous year. The share of those whose incomes rose by 50% or more also fell 2.3 percentage points to 9.7%, the lowest since the statistics were first compiled in 2018.

The income decline rate rose most sharply in the third quintile among the five income groups. The rate climbed 2.5 percentage points in the second quintile (38.0% → 40.5%), 3.3 points in the fourth (33.2% → 36.5%), and 1.0 point in the fifth (34.1% → 35.1%). By contrast, only the lowest, first quintile saw a decrease of 0.2 percentage points (29.3% → 29.1%), suggesting the income shock was concentrated in the middle class.

An official from the data agency explained, "Performance bonuses and gains in some manufacturing sectors such as semiconductors tend to be concentrated in the fourth and fifth quintiles, where workers in their 30s and 40s are clustered," adding, "For middle-income groups such as the third quintile, the warmth of this export boom may have limits in reaching them directly."

In its July report titled 'Why Is This Improvement in Terms of Trade Different?', the Bank of Korea analyzed that wage gains and capital gains driven by the semiconductor upturn are being concentrated among high-income, high-asset groups. This is why some argue that the export-led recovery is unlikely to translate into middle-class consumption.