Wage Disparity Worsens in Q1; Low-Income Households Face Increased Deficit Spending

Despite improvements in average wage indicators in the first quarter of this year, driven by performance bonuses in large export-oriented companies, the economic sentiment among ordinary citizens remains bleak. The growth in real wages has slowed, and low-income households are experiencing a faster increase in consumption than in income, leading to a deeper structure of deficit spending.

According to the Ministry of Employment and Labor's "April 2026 Business Labor Survey Results" released on May 28, the average nominal wage for employees in businesses with one or more regular workers was 4.555 million won, a 3.4% increase (149,000 won) compared to the same period last year.

However, when adjusted for inflation, the real wage was 3.847 million won, reflecting only a 1.3% increase (49,000 won). The ongoing rise in consumer prices has significantly offset the nominal wage gains.

In March, when performance bonuses and special allowances were concentrated, the wage gap between businesses of different sizes became more pronounced. The average total monthly wage for employees in businesses with 300 or more workers was 6.512 million won, approximately 1.7 times that of businesses with fewer than 300 workers (3.743 million won). The absolute wage gap reached 2.769 million won.

Special payments for regular employees increased by 4.4% year-on-year to 526,000 won, reflecting the impact of expanded performance bonuses in major export sectors such as semiconductors, automobiles, and shipbuilding.

In contrast, small and medium-sized enterprises, struggling with sluggish domestic demand and high interest rates, have faced challenges in securing funds for performance bonuses, exacerbating the perception of wage polarization. For instance, the total wage in the accommodation and food service sector in March was 2.343 million won, significantly below the overall average.

The increase in real wages has also been minimal. In March, real wages were 3.56 million won, showing only a 0.1% increase compared to the same month last year. With consumer price inflation remaining around 2%, the perceived improvement in wages has been limited.

The wage gap and stagnation in real wages are also evident in household data. The National Data Agency's "First Quarter 2026 Household Trends Survey Results" revealed that the average monthly income per household was 5.481 million won, a 2.4% increase compared to the previous year. However, the real income growth rate, adjusted for inflation, was only 0.4%.

Household consumption expenditure rose by 5.3% to 3.105 million won, significantly outpacing income growth. Consequently, the average household surplus decreased by 3.1% to 1.239 million won, while the average consumption propensity increased by 1.7 percentage points to 71.5%.

Notably, the bottom 20% of earners, or the first income quintile, saw their average monthly income rise by 2.7% to 1.17 million won, but their consumption expenditure surged by 7.3%. Their average consumption propensity reached 155.3%, indicating that their spending exceeds their disposable income. This suggests that many households are relying on debt or depleting existing assets to cover living expenses.

In contrast, the average monthly income for the top 20% of earners, or the fifth income quintile, increased by 4.2% to 12.378 million won, with disposable income rising by 5.1%. Their consumption expenditure also grew by 6.9%, but their average consumption propensity remained at 57.7%.

The income gap continues to widen. The quintile ratio for equalized disposable income rose to 5.91 times, up from 5.82 times in the same period last year. Equalized disposable income is a measure that reflects differences in household size, indicating that a higher figure signifies an increase in income polarization.