Korea’s income inequality is shown to be the worst. According to the International Monetary Fund, Top 10 percent of the entire Korean population receives 45 percent of the total income. As income inequality problems in Korea have exacerbated over the last two decades, the gap between the haves and the have-nots in other Asian nations has also clearly become apparent. Singapore follows Korea by 10 percent of the whole population holding 42 percent of the country’s wealth, and it is followed by Japan with 41 percent.
As expressing its concerns, IMF noted that “countries in the Asia-Pacific region need to address inequality of opportunities by broadening access to education, health, and financial services.”
In order to delve into the income inequality matter, it is important to view income inequality as a source of inappropriate investment and development in health and education, because wealth is concentrated in the top few percentage of the population. The widening gap between the rich and the poor is a side effect of the rapid economic growth around Asian countries. From 1990 to 2015, even in the midst of the financial crisis that struck Asia and the world, the region grew at around 6 percent, annually.
The perspective of regarding China and India as the “happily ever after countries,” is misleading as such a view neglects the systemic problems plaguing the nations today. The success of these countries is defined by rapid and continuous rates of growth, both aggregate and per capita national income. In addition to this economic growth, substantial reduction in income poverty within these countries draws the world’s attention to consult numerous fiscal policies. Notwithstanding this eye-opening economic progress, the strategy of development had brought relatively high income growth without mammoth improvement in the resource, especially labor, market. This disproportionate economic expansion, hence, has been accompanied by rising inequality in Asian economies, as referring to the increase in Gini coefficient from 36 in 1990 to 40 in 2013 in Asia.
Income inequality needs to be relieved in order to achieve social justice. Regardless of the gradual alterations in fiscal and social policies, fiscal policy and technological progress are crucial forces that can resolve income inequality in advanced economies, while human capital itself has been the sole working force in developing countries. The apt adoption of fiscal policy will combat rising inequality by broadening the coverage of social welfare system.
Education is particularly a suitable solution to rising inequality. Government-driven education programs will further provide the people with diverse opportunities to be involved in many workplaces. Not only students, but adults, who are already involved in their jobs, should be provided with opportunities to hone professional skills, by which they can utilize the acquired skill as a new work-driving force.
40 years ago, Bangladesh was the second poorest country in the world. Responding to inequality in its economic system, the Bangladesh government focused their policies on public services, microfinance programs, education, and the private sector. Likewise, the world should take steps in this direction.
Written by Da Eun Lee