Two years ago, the poverty rate among seniors in South Korea worsened to 38.1%, the highest level among the countries in the Organization for Economic Cooperation and Development (OECD).
According to data from the Ministry of Health and Welfare and Statistics Korea’s Household Financial Welfare Survey on the 11th, the relative poverty rate of the elderly aged 65 and over based on disposable income in 2022 was 38.1%.
Disposable income can be freely used for consumption and savings after subtracting taxes and other expenses from personal income and adding public transfer income such as pensions.
This is 0.5 percentage points higher than the previous year’s 37.6% in 2021. Far from improving, it has taken a “step back.”
Looking at the poverty rate among the elderly by gender, men were at 31.2%, while women were much higher at 43.4%.
This senior poverty rate is significantly higher than the overall relative poverty rate of 14.9% in our country or the relative poverty rate of the working-age population (18-65 years old) of 10% (men 9.6%, women 10.3%).
The “relative poverty rate” refers to the proportion of the senior population below 50% of the median income. On the other hand, the “absolute poverty rate” refers to the proportion of the total elderly population with incomes below the minimum cost of living.
Over the years, the senior poverty rate in our country has shown a decreasing trend, with 46.5% in 2011, 45.4% in 2012, 46.3% in 2013, 44.5% in 2014, 43.2% in 2015, 43.6% in 2016, 42.3% in 2017, 42.0% in 2018, and 41.4% in 2019.
Then, in 2020, it dropped to the 30% range for the first time at 38.9%, and in 2021, it fell by 1.3 percentage points to 37.6%, continuing the downward trend.
Although the senior poverty rate in our country has generally been alleviated since 2011, it is the highest level among OECD member countries.
According to OECD’s “Pension at a Glance 2023” data, as of 2020, the income poverty rate of the elderly aged 66 and over in Korea was 40.4%, nearly three times higher than the average of OECD member countries (14.2%).
Only Korea had a senior income poverty rate of as high as 40% among the OECD member countries.
The next highest were Estonia (34.6%) and Latvia (32.2%), which were in the 30% range, while Japan (20.2%) and the United States (22.8%) were only half of our country’s level.
Countries with low senior poverty rates were mainly Northern and Western European countries such as Iceland (3.1%), Norway (3.8%), Denmark (4.3%), and France (4.4%).
The poverty rate among Korean seniors increased as they got older.
Among the senior population aged 66 and over, the income poverty rate of the elderly aged 66-75 was 31.4%, but it was 52.0% for those aged 76 and over, meaning that more than one out of two people belonged to the poverty group.
Korean seniors also had unequal incomes between classes.
The Gini coefficient of disposable income of the elderly aged 66 and over was 0.376, higher than the OECD average (0.306). The Gini coefficient indicates income inequality; the closer the number is to 1, the more unequal it is.
Experts predict that the senior poverty rate will remain high for a considerable period under the current old-age secured income system, in which the public pension is not mature and the pension income is insufficient.
Korea’s pension income replacement rate (the ratio of the pension amount to be received to the average income during the pension enrollment period) was 31.6%, failing to reach even two-thirds of the OECD average (50.7%).
The “net pension replacement rate,” which compares disposable income after retirement with disposable income during work activity before retirement, was only slightly above half of the OECD average (61.4%) at 35.8%.
In fact, public pension expenditures in South Korea are only half of the OECD level, at 3.6% of the Gross Domestic Product (GDP).
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