The income growth rate of Korean corporations jumped rapidly last year, widening the gap with the growth trend of household income, the Bank of Korea data showed on Thursday.
The total income of firms here was tallied at 280.6 trillion won ($240 billion) in 2010, up 18.3 percent from a year earlier. During the same period, household income rose 7.3 percent to 727.2 trillion won.
The growth rate of corporate income is more than twice as fast as household income.
In the early 2000s, corporations saw their income reach double-digit growth that outpaced that of household income. The trend reversed in the mid-2000s, only to shift direction again after the country was hammered by the 2008 financial crisis.
In 2007 and 2008, the corporate income growth rate stood at 12.8 percent and 10.3 percent, while household income grew 5.2 percent and 4.4 percent, respectively.
In 2009, corporate income reached 9.0 percent while household income went up just 2.9 percent. Shortly after the global financial crisis hit, both income at firms and households took a beating, but the impact was greater for households.
The underlying reason is that the Korean government has long focused on exports for economic recovery from external shocks. The fourth-largest economy in Asia relies heavily on exports for growth, and government trade and economic policies are said to be set in a way that benefits major exporters such as Samsung Electronics and Hyundai Motor.
At the same time, many Korean companies have frozen wages in the past couple of years, citing greater uncertainty in the markets.
Gross national income data also showed that corporations have reaped benefits from the export-driven economy while local households have been left behind. The proportion of corporate income in GNI was 20.2 percent in 2007, 21.0 percent in 2008, 22.2 percent in 2009 and 23.9 percent in 2010. The equivalent figure for household income went down from 64.6 percent in 2007 to 62.0 percent in 2010.
The BOK said demand for Korea’s semiconductors, automobiles and mobile phones surged overseas following the 2008 crisis, providing momentum to the overall growth of income at big corporations. In contrast, the business conditions for smaller enterprises such as family-owned restaurants were not favorable, hampering the income growth of households.
