During the post Korean War era, South Korea went through what was known as the “Miracle on the Han River” - a period of staggering economic development that transformed South Korea from a developing country to a developed country. Since then, South Korea never looked back and soared up in economic rankings to a point where it now has the 11th highest nominal GDP in the world (IMF World Economic Outlook, April 2016). One important driving factor behind South Korea’s rapid economic development was the growth of the middle class. As stated in the article “Middle Class Series: The Middle Class Grows the Economy, Not the Rich” (American Progress), “a strong middle class is good for economic growth” due to the way middle class citizens tend to spend their money. The same concept can be applied to South Korea. In the course of a virtually non-existing South Korean middle class in 1950 becoming 75% of the total population in 1990 (Hyundai Economic Research Center), South Korea’s GDP per capita has increased by more than 4 folds (The World Economy: A Millennial Perspective, OECD Development Centre Studies, Paris 2001). Unfortunately, that backbone of the nation’s economy seems to be dwindling: a survey by CitiBank’s Asia Pacific Office reveals that 82% of middle-class Koreans feels “financially unstable.”

          Why would such a large portion of the middle suffer financially in a developed country like South Korea? The answer lies behind the fact that inequality is prevalent in South Korean society: as of 2013, South Korea’s gini coefficient stood at 0.353 (Statistic Korea, a national statistical agency run by the South Korean government). This ranks Korea 6th highest among the 34 OECD countries (a higher gini coefficient indicates more inequality). What is worse is that this number is currently on an increasing trend – it stood at 0.298 in 1999 and 0.315 in 2010 (East Asia Forum, an initiative of East Asian Bureau of Economic Research). Basically, the already severe inequality in Korea is only getting worse.

          The outset of such dramatic inequality can be traced back to the aftermath of the 1997 financial crisis. During the crisis, “huge number of people suffered from layoffs, early retirements and business failures, and many middle-class people experienced downward mobility. But the consequences of the financial crisis were uneven...majority of working people suffered tremendously, those who possessed financial resources...came out of the crisis richer than before” (East Asia Forum). Furthermore, since then, the so-called “lifetime employment” mostly vanished from the job market, leading to less security and increased competition (East Asia Forum). Naturally, workers decided to invest heavily on educating their children, instead of saving up for themselves, to ensure their children will have a better life: “70% of Korean household expenditure, according to estimates by the Samsung Economic Research Institute in Seoul, goes toward private education, to get an educational edge over other families” (BBC, “Asia Parents suffering ‘education fever’”).


           Sadly, most of those children turned out to enter an extra competitive, seemingly unfair society where they face challenges to even look after themselves. As of 2012, the top 10% of Korea’s population, typically descendants of those who took advantage of the crisis, possessed 46% of the state’s total wealth. Meanwhile, the bottom 50%, typically descendants of those who had trouble recovering from the crisis, shared 9.5% of the state’s total wealth (East Asia Forum).Interestingly, the terms “gold cutlery (금수저)” and “dirt cutlery (흙수저)” -  which illustrate the idea that people’s privileges, social status, and wealth are decided from birth - are quite popular in Korea today, according to Hankyoreh and Yonhapnews. As inequality only continues to worsen, the future doesn’t look so bright for the average South Korean citizen.











Byoung Joon Bae
Grade 11
Asia Pacific International School

Copyright © The Herald Insight, All rights reseverd.