Poverty and Income Inequality in South Korea Essay

s unwraphbound Korea is counted among the worlds leading economies alongside giants such as United States and Germ each (Wiseman & Nishiwaki, 2006). Before the financial crisis bam Asia in 1997, confederation Korea was among the fastest ripening economies of the world with a Gross internal Product (gross domestic product) growth rate stup hold arseous 5 per centum (Kakwani, Khandker, & Son). Kwack & Lee (2007) proclaim that in go d admit dissimilitude had been reduced crosswise the plain before the financial crisis. Moreover, in the midst of the age 1965 and 2005, income inequality had not significantly change magnitude. completely the same(p), amid the eld 1998 and 2005, in the south Korea see a hook in income inequality seeing that the Asiatic financial crisis was immense in its scope (Kwack & Lee, p. 20). Also, betwixt the classs 1990 and 1997, the per centumage of in the south Korean muckle classified as woeful had steady decreased from 39. 6 mapping to 8. 6 part (Kakwani, Khandker, & Son). conspiracy Korea was coming to be known as an frugality with comparatively equal distri plainlyion of income and with full c at a timern (Kakwani, Khandker, & Son). muchover, the Asian financial crisis naturally change magnitude the number of pathetic stack in the acres.In fact, the contri besidesion of misfortunate change magnitude to 19 share in 1998 it was 13. 4 percent a twelvemonth later onward (Kakwani, Khandker, & Son). fit in to a study conducted by Kakwani, Khandker, & Son, the pitiable of southwest Korea were disproportionately modify by the Asian financial crisis of 1997. til now though the southeastern Korean economy started to grow again immediately after the crisis, the benefits of growth did not reach the poor as they did the lavish. accordingly again, the authorities of mho Korea introduced new welfargon programs for the very poor during that duration.The poor batch of the acres did not benefit fr om these programs, however. It was entirely the very poor that were positively wedge (Kakwani, Khandker, & Son). What is more than, contrary to the reading of income inequality statistics as presented by Kwack & Lee, the planetary Monetary Fund has expressed spacious concern over this problem in southern Korea during the present era of globalisation ( broadening dissimilarity IMF Acknowledges Downsides of Globalization, 2007). A underwrite print in Korea Times in October 2007 readsMany southerly Koreans believe the kingdom has no other election nevertheless to pursue the international trend in a bid to survive fiercer aspiration with other countries. Policymakers atomic number 18 trying to contribute the local market wider to foreign products, man promoting sales of Korea, Inc. , under the spirit of sinlessr trade. They go all-out to attract foreign enthronization by setting up free economic zones and international business towns. aires be also expanding thei r overseas net campaigns for production, sales and coronation under the motto of globalization.In this regard, a new-fashioned IMF discover caught the attention of economic policymakers, company executives, citizens and anti-globalization activists. Last week, the international form published its semi one- family economic review, the introduction sparing Outlook, before the IMF and the realness believe meeting scheduled for Oct. 20-21. The IMF said in the insure that technology and foreign enthronement are making income inequality worse around the world. The review tries to figure out why income inequality has widened in both(prenominal) cryptical and poor countries in the historical two decades.It is the first time that the IMF has come up with such a report admitting to the negative effects of globalization. Over the past(a) two decades, income inequality has risen in most regions and countries, the report said. We can tick much from the report. We use up to admit that conspiracy Korea has experienced widening income inequality, especially hobby the Asian financial woes. The income brackets get to already been divided into 20 percent rich and 80 percent poor. That is the nations middle class has crumbled because the gap between the rich and poor widened.The 20-80 ratio is on the verge of moving to a 10-90 ratio, tho worsening the income gap. In addition, businesses fork up use non-regular doers and migrant laborers from foreign countries who suffer from menial paymentment, poor working conditions and other unlikeness. A law protecting non-regular workers took effect in July, but little progress has been do to guarantee their equal rights. Policymakers will hand over to take bolder measures to narrow income inequality and set about other negative effects of globalization. (Widening Inequality IMF Acknowledges Downsides of Globalization)It is oft say that globalization is accompanied by a widening gap between the commences and suck in-nots of the world. When a Korean farmer suddenly appeared during a meeting of introduction mint arrangement and committed suicide, the problems facing the global political scienceal economy were highlighted that, in fact, the interests of the poor moldiness be heeded, better than before. The farmer was wearing a shirt that read, WTO KILLS FARMERS (Cho, 2008, pp. x). after(prenominal) all, it is not uncommon for experts and non-experts alike to claim that the World Trade Organization does not work the interests of the rich and the poor equally.Nevertheless, in that respect is a recoil to how much the World Trade Organization can do for the poorest muckle of the world. It is, in fact, for the government of southmost Korea to deal greater responsibility for poor Koreans. According to some other news report published in siemens Korea in the year 2007, The wage difference of the lower 10 percent of earners versus upper 10 percent move up to a factor of 5. 4 in 2006 from 4. 8 in 2001, essence that engage for the top decile of earners were nearly five-and-a-half generation greater than those of the lowest decile of earners (A whole step at southwesterly Korean Society, 20 historic period after Democracy, 2007)It is for the southernmost Korean government not only to correct income scattering in the country but also to implement policies to end vilification as hygienic as discrimination of the poorest workers. Individual income in south-central Korea rose fivefold between the years 1987 and 2007. But, South Korea has not made progress to end income inequality. The Gini coefficient is typically the statistical measure of choice to assess income distribution. A Gini coefficient of zero indicates absolutely equal income distribution, while a coefficient of 1 indicates perfectly inequality.In 1987, the year that South Korea became a democratic country, its Gini coefficient was 0. 31. By the year 1997, South Koreas Gini coefficient ha d been reduced to 0. 28 as the country had made strides in reducing the gap between the shakes and the have-nots. But then the Asian financial crisis ensued. By 2006, South Koreas Gini coefficient was back to 0. 31. Although the coat of the economy had grown from $500 one thousand thousand to $800 billion, income distribution had been reduced between 1997 and 2006. Unsurprisingly, the poorest volume of South Korea are confronting discrimination and abuse.After all, the rich are getting richer at the expense of the poor. As a take of fact, exploitation of labor is reality in South Korea (A Look at South Korean Society, 20 old age after Democracy). Robert J. Barro, a prof of economics at Harvard University, explains that brisk standards across South Korea were raised with its dramatic rise in GDP. As examples, the infant deathrate rate fell from 8 percent to 0. 8 percent and life foretaste rose from 54 years to 73 years. Additionally, income distribution in South Korea has bee n more equitable as compared to the United States and Japan.When psyche income rose in South Korea, low-income groups were beneficiaries, too, and want was reduced (Barro, 2003). Then again, as we have already discussed, the Gini coefficient of South Korea in 2006 was the same as in 1987. This reveals that although the poor raft of South Korea have higher reinforcement now than before, the gap between the haves and the have-nots has not been narrowed. So, Professor Barro suggests that South Korea moldiness work on improving its education carcass. If the poor flock of South Korea have entryway to good quality education, it would be easier to emend income distribution.Moreover, the country needs to set up merged governance (Barro). These changes are sure to enhance working conditions and living standards of poor workers. Then again, South Korea may not be able to condescend half of its immemorial households living in a order of relative poverty with these improvements (K orea Highest in decrepit Poverty, 2008). In fact, the income of these households is lower than 50 percent of average household income in the country. Although South Korea has a pension shunning for the fourth-year, the percentage of the poor that may benefit from the scheme is small.Because the traditions of South Korea demanded of children to take care of their parents upon arrival adulthood, the country does not have a developed favorable insurance system for the elderly. What is more, South Korea is aging fast. At least(prenominal) 7 percent of its poor are over 65 today (Korea Highest in Elderly Poverty, 2008). At the same time as fond welfare programs remained underdeveloped, South Korea generated 3100 more people owning at least U. S. $1 million worth liquid state assets between the years 2000 and 2001 (Asian Millionaires A Tough Bunch, 2002).According to Australian Banking & Finance, among the thinks for this speedy production of millionaires is increasing income ine quality (Asian Millionaires A Tough Bunch, 2002). To put it another way, merged leaders are raising their organizational r regular(a)ues, thanks in part to globalization, even as the poorest workers of their organizations continue to be paid low remuneration. In the year 2007, South Korea experienced the widest gap between the haves and the have-nots since the Asian financial crisis.In fact, the yearbook income of 20 percent of South Koreans earning the highest incomes was 5. 44 times greater than the annual income of the 20 percent that earned the lowest incomes. In 2006, the rich were earning 5. 38 times more than those that earn the least (Income rupture at its Widest Point since 1999 pecuniary Crisis, 2008). Analyzing the statistics, The Hankyoreh reports that income and wage gaps between 20 percent of the highest earners and 20 percent of the lowest earners had actually widened by 7. 9 percent and 11. 7 percent on an individual basis between the years 2002 and 2007.What is more, statistics on income distribution in South Korea reveal that the richest people of the nation are earning more than the people of developed countries, while the poorest South Korean households have incomes that are equivalent to those of households in less developed countries. Even the World Bank has confirmed that poor South Koreans have the same living standards as those of the citizens of El Salvador or Gabon. Rich South Koreans, on the contrary, have the same living standards as in the altogether Zealanders and Australians (Income Gap at its Widest Point since 1999 fiscal Crisis).Professor Barros analysis of income disparity in South Korea must be considered incomplete for the reason that there is no decline in the loading of consumption on low-income households (Income Gap at its Widest Point since 1999 Financial Crisis). These households pay their cellular phone and Internet bills with double as much of their incomes as do rich households. Despite the fact that wage s have increased according to Barro income disparity continues to widen. Son Tae-jeong, one of the re lookupers at the LG Economic Research Institute in South Korea, stated that salaries increased between the years 2006 and 2007 to boot.However, the poorest workers do not seem to have availed the benefits of the rise in salaries across the country (Income Gap at its Widest Point since 1999 Financial Crisis). South Korea has introduced necessary legislations to strengthen its affable welfare programs. There are social protective covering schemes which are insurance establish and applicable only to certain occupational groups. These schemes cover pensions and healthcare among other things. The government of South Korea also offers subsidies for housing on a limited basis.But, most social security programs in the country only offer benefits related to earnings. Furthermore, these social security schemes are structured in a way that limits income redistribution from high-income to l ow-income groups (Social well-being in eastern Asia Low cosmos expenditure but Low Income Inequality, 2008). Even though there are organizations across the country that continue to retain their unproductive workers, there is no way for them to cure the plague of poverty afflicting the elderly poor of South Korea (Social Welfare in East Asia Low familiar Spending but Low Income Inequality).The poor elderly South Koreans cannot be financially support by their grown up kids because even though labor productiveness and GDP have risen together, real wages have lagged behind (Chung, 2007, p. 228). abject workers have low standards of living in any geek, seeing that corporate leaders must focus on raising their own living standards even if they offer support to unproductive workers. Of course, as Barro has stated, education and corporate governance may work wonders in eradicating the problem of poverty facing the worker and his or her elderly parents in South Korea.Uneducated peopl e usually have low living standards (Savada & Shaw, 1990). Moreover, in the workplaces of South Korea, these people are treated with stretch out contempt by university graduate managers (Savada & Shaw). change magnitude numbers of South Korean workers have migrated from agricultural farms to industrial establishments in recent years. Nevertheless, poverty has not been eradicated (Savada & Shaw). Rather, the differences between the haves and the have-nots have remained. The Asian financial crisis had negatively impacted both the rich and the poor of South Korea. But, as mentioned before, the poor were disproportionately affected.Poor South Koreans had to reduce their outlay by 9. 8 percent in the year 1998. The rich only reduced their spending by 0. 6 percent. Additionally, as briefly as the Korean economy was back on its growth track, the rich are known to have greatly increased their spending. In point of fact, the consumption of luxuriousness goods rose to the extent that sal es of golf game equipment were increased by 357. 6 percent between 1998 and 1999 (Yim, p. 32). The poor South Koreans, on the other hand, were left to their living standards resembling those of people in underdeveloped countries.Of a certainty, the government of South Korea must be formulating and implementing the kinds of policies compulsory to resolve these structural economic issues once and for all. The country possesses the capacity to grow beyond expectations. But, at the same time, income inequality and poverty create such a burden that a South Korean farmer came to commit suicide at a meeting of the World Trade Organization. The rich capitalists of South Korea pay low wages to workers who go on increasing their productivity nevertheless. Furthermore, poor, uneducated workers are abused and victimized in the South Korean workplace.By instituting good corporate governance programs, the government of South Korea may very well correct this problem. After all, it is because of the poor workers want to increase productivity that has made South Korea one of the most important economies in the world today. The country would not be able to sustain its economic define if it fails to heed its workers needs. References A Look at South Korean Society, 20 Years after Democracy. (2007, Jun 8). The Hankyoreh. Retrieved frustrate 20, 2009, from http// web. hani. co. kr/arti/english_edition/e_national/214664. html.Asian Millionaires A Tough Bunch. (2002, Oct 15). Australian Banking & Finance. Retrieved invalidate 20, 2009, from http//findarticles. com/p/articles/mi_hb4849/is_18_11/ai_n28954879. Barrow, R. J. (2003, Jun 9). South Korea How to Keep the Miracle Going. Business Week. 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