Despite Semiconductor Super-Boom, Real Income Growth Stays at 0% in Q1... Income Distribution Worst in Six Years

Ministry of Data and Statistics Releases Q1 Household Trends Survey
Government: "Supplementary Budget to Be Swiftly Executed for Vulnerable Groups"

Taking into account inflation in the first quarter of this year, real income growth remained at the 0% level. Thanks to the semiconductor super-boom, large corporations such as Samsung Electronics and SK hynix paid out higher holiday bonuses and performance-based incentives, resulting in a prominent increase in income among the top 20% of earners. In contrast, income in the bottom 20% grew more slowly, leading to the worst income distribution indicators in six years.

The Ministry of Data and Statistics announced these findings in its "Household Trends Survey for the First Quarter of 2026" released on May 28. In the first quarter of this year, the average monthly household income was 5,481,000 won, up 2.4% from a year earlier. The increase in the number of employed persons led to a 0.3% rise in earned income. Business income rose by 2.6%, driven by an increase in the number of self-employed, as well as growth in service sector production and retail sales. Transfer income also grew by 9.7% due to an expansion in the number of public pension recipients and an increase in benefit amounts. Property income rose by 9.1% as well.

An official at the Ministry of Data and Statistics said, "Dividends increased in response to the booming stock market, which was reflected in property income." However, the official also noted that "property income has a high relative standard error, so it is advisable to focus on the trend rather than the absolute figures."

The real income growth rate for the first quarter, excluding the effects of inflation, was 0.4%. Real income growth stagnated at 0% in the second quarter of last year, grew to 1.5% in the third quarter, and rose further to 1.6% in the fourth quarter, but has since narrowed again. Breaking it down, real earned income decreased by 1.7%. After dropping by 0.8% in the third quarter of last year and rebounding with a 1.5% increase in the fourth quarter, it turned negative again.

Real earned income saw its largest decline since a 4.0% fall in the first quarter of 2024. Real business income increased by 0.5%, while real transfer income rose by 7.5%. The distribution indicator worsened as higher income groups saw a greater rate of income growth. The average monthly income for households in the bottom 20%, or the first quintile, was 1,170,000 won, an increase of 2.7% from a year earlier. Business income and earned income grew by 26.7% and 3.4% respectively, but transfer income, which accounts for the largest share in the first quintile, fell by 0.6%. In contrast, the average monthly income for households in the top 20%, or the fifth quintile, was 12,378,000 won, an increase of 4.2%.

The rate of increase in earned income (2.5%) was lower than that of the first quintile, but the rate of increase in transfer income (25.1%) was higher. The Ministry of Data and Statistics analyzed that the higher growth in transfer income for the fifth quintile was due to the inclusion of holiday money and allowances given during the Lunar New Year. Business income (-1.1%) declined. As for the other quintiles, the second quintile rose by 1.5%, the third by 1.2%, and the fourth by 0.5%.

The quintile ratio of equivalized disposable income was 6.59. This is 1.0 percentage points higher than the previous quarter's 5.59, and the highest since the first quarter of 2020 (6.89). This figure measures how many times higher the disposable income per household member is in the top 20% compared to the bottom 20%. Typically, a higher ratio indicates worsening income distribution. However, since household income by quarter is affected by seasonality and volatility, official judgments on income distribution improvement can only be made through the Household Financial Welfare Survey (annual indicator).

An official from the Ministry of Data and Statistics said, "Due to the large amount of holiday bonuses and performance-based incentives paid in the first quarter, income among large corporate workers in the fifth quintile increased substantially. As a result, the equivalized disposable income quintile ratio also appears to have increased."

The government has stated its intention to introduce emergency measures for vulnerable groups. An official from the Ministry of Economy and Finance said, "We will also accelerate efforts to tackle structural issues such as polarization," adding, "In order to support the livelihood stability of vulnerable groups, we will promptly execute the supplementary budget (extra budget) for measures such as high oil price compensation and emergency welfare livelihood support."

This content was produced with the assistance of AI translation services.