Public transfer income jumped 27.6% as wage growth was limited to 0.8%

High fuel-price relief payments offset falling real wages for second straight quarter

Bottom quintile income rose 7.5%; income gap ratio hits post-2019 reform low

Residents apply for victim support funds at the Gaegeum 3-dong community center in Busanjin-gu, Busan. [Yonhap]
Residents apply for victim support funds at the Gaegeum 3-dong community center in Busanjin-gu, Busan. [Yonhap]

Average monthly household income rose 4.5 percent in the second quarter compared with a year earlier.

Wage income grew just 0.8 percent, however, with roughly 69 percent of the overall income gain coming from public transfer income — government relief payments, pensions and similar benefits. Transfer income largely offset a decline in real wages, driven by concentrated disbursements of high fuel-price relief funds.

According to the household income and expenditure survey for the second quarter of 2026, released Thursday by the Ministry of Statistics, average monthly income per household nationwide stood at 5.295 million won ($3,820), up 4.5 percent from the same period last year. Real income growth, stripping out inflation, came to 1.5 percent.

Breaking down income by type, wage income reached 3.218 million won, up just 0.8 percent. Business income reached 977,000 won, up 3.8 percent, while property income rose 21.3 percent to 67,000 won.

[Provided by the Ministry of Statistics]
[Provided by the Ministry of Statistics]

Transfer income was the primary driver of the overall income increase.

Average monthly transfer income rose 20.4 percent to 931,000 won. Public transfer income — which includes public pensions, basic pensions, social benefits and year-end tax refunds — jumped 27.6 percent, from 573,000 won to 731,000 won. Private transfer income from family and relatives, by contrast, fell 0.2 percent to 200,000 won.

Of the 230,000-won increase in total income over the year, public transfer income accounted for 158,000 won, or about 68.7 percent. Wage income contributed just 24,000 won. The share of wages in total income slipped 2.3 percentage points, from 63.1 percent to 60.8 percent, while the share of transfer income rose from 15.3 percent to 17.6 percent.

The Ministry of Statistics said the high fuel-price victim support fund was a major factor behind the surge in public transfer income. Park Soon-ok, head of the ministry's household budget trends division, said the fund "was reflected in public transfer income and affected all income quintiles, particularly contributing significantly to income growth in the bottom quintile."

Although nominal wage income edged up, real wage income fell for a second consecutive quarter after adjusting for inflation. The ministry cited a slowdown in the growth of salaried workers in the first quarter, followed by an outright decline in the second quarter, as the main cause. A slowdown in wage growth at businesses also weighed on real wage income, it said.

Average monthly household consumption expenditure rose 3.4 percent to 2.932 million won. Real consumption expenditure growth, however, was limited to 0.4 percent after adjusting for inflation. Spending on household goods and domestic services jumped 17.9 percent, while recreation and culture rose 7.6 percent, healthcare 4.2 percent, and food and accommodation 3.5 percent. Spending on alcohol and tobacco fell 2.2 percent, and transportation costs declined 0.5 percent.

Non-consumption expenditure — covering taxes, pension contributions, social insurance premiums and interest payments — averaged 1.06 million won per month, up 1.9 percent. Interest payments rose 12.1 percent to 143,000 won, and social insurance spending increased 5.6 percent.

Disposable income, calculated by subtracting non-consumption expenditure from total income, rose 5.2 percent to an average of 4.235 million won per month. The surplus after deducting consumption expenditure from disposable income increased 9.6 percent to 1.302 million won. The average propensity to consume fell 1.2 percentage points from a year earlier to 69.2 percent.

Monthly income for households in the bottom 20 percent, or the first quintile, rose 7.5 percent to 1.283 million won. Public transfer income for that group increased 11.6 percent to 694,000 won. Monthly income for the top 20 percent, or the fifth quintile, grew just 3.8 percent to 11.15 million won. Wage income for the fifth quintile actually fell 1.7 percent to 7.184 million won.

Disposable income for first-quintile households stood at 1.094 million won, however, while consumption expenditure reached 1.372 million won — implying an average monthly deficit of about 277,000 won. Their average propensity to consume was 125.3 percent, meaning they spent 25.3 percent more than their disposable income.

Income distribution indicators improved markedly.

The fifth-to-first quintile ratio of equalized disposable income fell from 5.45 in the second quarter of last year to 4.97 this quarter, a drop of 0.48 — the lowest level since the statistics were revised in 2019. The ratio divides the equalized disposable income of the top 20 percent by that of the bottom 20 percent; a lower figure indicates a smaller income gap.

The Ministry of Statistics cautioned, however, that the improvement is difficult to treat as a trend. The second quarter tends to show a seasonally lower ratio because bonuses and performance pay concentrated in the first quarter are absent, and this year the temporary effect of the high fuel-price relief fund added to that seasonal pattern.

Park said it is "clear that the relief fund affected income growth in the first quintile, but whether the improvement in the fifth-to-first quintile ratio will continue as a trend remains to be seen," adding that annual income levels and distribution conditions should be assessed using the household finance and welfare survey supplemented by administrative data.

Meanwhile, the weak growth in wage income is also reflected in recent real wage trends.

According to the business labor force survey released Thursday by the Ministry of Employment and Labor, average monthly total wages per worker at businesses with one or more full-time employees reached 4.094 million won in June, up 123,000 won, or 3.1 percent, from the same month last year.

Real wages per worker, adjusted for consumer price inflation, came to 3.412 million won — down 2,000 won, or 0.1 percent, from 3.414 million won in June last year. Real wages have now fallen for three consecutive months since April. The last time real wages declined for three or more consecutive months was from April to August 2023, when they fell for five straight months.


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