The deficit size of low-income vulnerable households in the first quarter of this year surged. Households in the 4th and 5th quintiles, which are relatively high-income groups, saw a more than 5% increase in disposable income, but their consumption expenditure increased slightly or even decreased. There is a call to increase support for vulnerable groups rather than the universal welfare policy of 'National Support Fund' as the average propensity to consume among high-income groups has decreased.
According to the '2025 First Quarter Household Trend Survey' released by Statistics Korea on the 29th, the average monthly income of the first quintile, which is the bottom 20% income group, was 1.14 million won, a decrease of 1.5% compared to the same period last year. Household expenditure amounted to 1,578,000 won, an increase of 4.2%. Among household expenditure, consumption expenditure was 1,358,000 won, and non-consumption expenditure was 219,000 won. Compared to the same period last year, consumption expenditure increased by 3.6%, and non-consumption expenditure increased by 8.3%.
Disposable income, which is income minus non-consumption expenditure, was 921,000 won, a decrease of 3.6% compared to the same period last year. The household account balance, subtracting consumption expenditure from disposable income, recorded a deficit of 438,000 won. The deficit size increased by 22.7% compared to the same period last year. The deficit rate reached 47.6%, an increase of 10.2 percentage points from the same period last year, indicating that the livelihood situation of the first quintile households has become significantly harsh.
On the other hand, the living conditions of high-income groups have improved compared to before. Income for the 4th quintile was 6,578,000 won, an increase of 5.8% compared to the same period last year, and income for the 5th quintile was 11,884,000 won, an increase of 5.6%.
The growth rate in household expenditure was smaller than the income increase. Expenditure for the 4th quintile increased by 1.3%, and for the 5th quintile, it increased by only 2.8%. Notably, consumption expenditure increased by 2.1% for the 5th quintile, while it actually decreased by 0.7% for the 4th quintile.
The household account surplus for the 4th quintile was 1,638,000 won, a 22.5% increase compared to the same period last year, and the surplus for the 5th quintile was 3,976,000 won, an increase of 11.4%.
The average propensity to consume decreased by 4.4 percentage points for the 4th quintile and 2.1 percentage points for the 5th quintile. This means that even though they have more money, they are not spending proportionally.
Considering these income and expenditure situations by quintile, there are voices suggesting that selective assistance targeting vulnerable groups may be more effective than the economic policy of providing support payments to the entire nation. It is also pointed out that distributing the National Support Fund on a large scale could stimulate market demand, driving up prices and further burdening low-income and vulnerable groups, leading to a vicious cycle.
Professor Byung-Hoon Suk from Ewha Womans University noted, "Although the income of first-quintile households has decreased, expenditure has increased because prices have soared," adding, "Even if prices rise, it is impossible to cut back on food expenditure necessary for survival." Professor Suk further pointed out, "Considering the worsening wealth gap, selective support targeting vulnerable groups is necessary rather than universal support," and warned, "If additional Government Bonds are issued to fund the National Support Fund, market interest rates may rise, further burdening low-income households."
An official from the Ministry of Economy and Finance noted, "We are focusing on the negative income indicators of the first quintile," adding, "There are noticeable changes in the composition of the first quintile in the household trend survey. The proportion of older people has decreased, while the share of self-employed or unemployed individuals with sharply declining business income has increased."
The official further stated, "There seems to be a need to strengthen efforts in policy projects targeting these groups," and added, "It is crucial to closely monitor the employment conditions of vulnerable youth, seniors, and individuals with disabilities and ensure the creation of quality jobs in the private sector. We will continue to expand the employment and social safety nets for vulnerable groups."