INCOME AND EXPENDITURE:

SOUTH KOREA
Euromonitor International
June 2016

INCOME AND EXPENDITURE: SOUTH KOREA

LIST OF CONTENTS AND TABLES

Chart 1

SWOT Analysis: South Korea ...................................................................... 1

Gross Income by Age ................................................................................................................... 1

Educational and Health Services in Demand Among the Richest Citizens ............................... 1
Chart 2

Gross Income Distribution in South Korea ................................................... 2

Social Class Composition ............................................................................................................. 2

Concentration of 65+ Age Cohort in Social Class D ................................................................. 2
Chart 3

Overview of South Koreas Social Classes .................................................. 3

Household Income Distribution ..................................................................................................... 3

Despite Low Income Inequality Youth Unemployment Remains An Issue ................................ 3
Chart 4

Household Income Distribution in South Korea ............................................ 4

Consumer Expenditure by Category ............................................................................................ 5

Discretionary Spending Well Above the Regional Average ...................................................... 5
Chart 5

Consumer Spending in South Korea ............................................................ 5

Consumer Expenditure by Region ................................................................................................ 6

Gyeonggi-do A Magnet for Businesses, Due To Highest Consumer Spending ........................ 6
Chart 6

South Koreas Consumer Market by Region ................................................ 7

Consumer Expenditure by Income ............................................................................................... 7

Household Goods and Communications Services Popular Among the Middle Class ............... 8
Chart 7

Consumer Spending by Income Type in South Korea.................................. 8

Consumer Expenditure by Household .......................................................................................... 9

Businesses Look To Target Rising Numbers of Single-person Households ............................. 9
Chart 8

Spending by Household Type in South Korea............................................ 10

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INCOME AND EXPENDITURE: SOUTH

KOREA
As one of the leading Asian consumer markets, South Korea provides ample opportunities for
firms across industries. Stable economic growth, low income inequality, and the industrial hubs
of Seoul and Gyeonggi-do have fuelled spending on luxury apparel, education and high-tech
household goods. However, the population is ageing and youth unemployment is high. While
the minimum wage has been raised, social welfare is still inadequate. Health services are in
high demand among elderly consumers.
Chart 1

Source:

SWOT Analysis: South Korea

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GROSS INCOME BY AGE

Educational and Health Services in Demand Among the Richest
Citizens
The age cohort 45-49 had the highest average gross income as of 2015 but South Korean
citizens aged 15-19 are expected to witness the fastest growth in average gross income over
the period of 2016-2030. With the population ageing rapidly, more businesses will look to
employ younger workers with the government expected to implement measures to create
more permanent jobs for the youth. The post-baby boomer age groups 40-44 and 45-49 will
have the highest concentration of citizens earning in excess of US$150,000 in 2030.
Businesses can target this segment with luxury apparel and footwear and premium travel
services. Cost-effective communications, food and household products will be demand from
the youth segment;
The heat map below shows that wealth is concentrated within the age group 40-54 and these
citizens are the chief consuming class. Since South Korea is a rapidly ageing society,

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businesses providing premium health services to this segment can be expected to do well
financially. With good education being highly regarded in the country, educational services,
mainly for the children of the rich, will be in demand going forward.
Chart 2

Source:
Note:

Gross Income Distribution in South Korea

Euromonitor International from national statistics

Data for 2016-2030 are forecasts

SOCIAL CLASS COMPOSITION

Concentration of 65+ Age Cohort in Social Class D
The largest number of South Koreans was concentrated in social class D as of 2015 and this
social class will continue to be the largest through to 2030. The age cohort 65+ formed the
largest population segment in social class D and will further increase its proportion by 2030. A
rapidly ageing population has negatively affected the economic situation of a large number of
elderly citizens, partly due to low pension payouts, despite the fact that the government
started long-term care insurance in 2008.
Businesses providing cost-effective and convenient health products and services to the
elderly population would have the biggest opportunities going forward. For instance, South

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Korean companies have developed medical robots to deliver health solutions by leveraging
advanced medical technologies and highly-skilled professionals.
Chart 3

Source:
Note:

Overview of South Koreas Social Classes

Euromonitor International from national statistics

Data for 2016-2030 are forecasts

HOUSEHOLD INCOME DISTRIBUTION

Despite Low Income Inequality Youth Unemployment Remains An Issue
South Korea has relatively low income inequality, due to stable economic growth and a low
unemployment rate. While income disparity across the population remains low, certain
segments within the population face economic hardships. Youth unemployment is high, due to
lesser creation of well-paying permanent jobs and skills-set mismatch among college

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INCOME AND EXPENDITURE: SOUTH KOREA

graduates. Rapid population ageing and inadequate government welfare support have
increased the economic vulnerability of the elderly population;
The government has taken steps to improve the economic condition of the lower income
segments of the population. The minimum wage has been raised by 8.1% in 2016, which will
boost income and consumption of low-income workers, and the government has proposed
pension reforms to provide better financial support to retirees. The number of childcare
facilities will also be enhanced and more flexible hours will be granted to encourage working
mothers and to increase the female workforce participation rate. Creation of more good
quality, permanent jobs for the nations youth will also keep income inequality low going
forward;
Due to low income inequality and higher purchasing power among the nations middle
classes, businesses providing communications products, such as smartphones and tablets,
household products and healthy packaged food are expected to do well. Health services
would be the main attraction for the elderly population, while the lower-income youth segment
can be targeted with cheaper communications and household services.
Chart 4

Household Income Distribution in South Korea

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Source:
Note:

Euromonitor International from national statistics

Data for 2016-2030 are forecasts. Data are in constant US$.

CONSUMER EXPENDITURE BY CATEGORY

Discretionary Spending Well Above the Regional Average
South Koreas discretionary consumer spending (ie spending on items other than food, nonalcoholic beverages and housing) as a percentage of total consumer spending was well
above the regional average in 2015. In absolute terms, South Korea had the fourth highest
discretionary consumer spending in Asia Pacific. Stable economic expansion, low
unemployment, and government initiatives to boost consumption is expected to fuel growth in
consumption expenditure and discretionary spending through to 2030;
Due to the rapidly ageing population, health goods and medical services registered the fastest
growth among discretionary spending categories over 2010-2015 and this trend is expected to
continue during 2016-2030. While luxury apparel and footwear also witnessed rapid growth up
to 2015, going forward, housing and communications will be in the top three spending
categories over 2016-2030. Therefore, ample opportunities exist for businesses providing
health and communications services for the elderly, as well as the youth segment.
Chart 5

Consumer Spending in South Korea

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Source:
Note:

Euromonitor International from national statistics /UN/OECD

Data for 2016-2030 are forecasts

CONSUMER EXPENDITURE BY REGION

Gyeonggi-do A Magnet for Businesses, Due To Highest Consumer
Spending
South Korea was the fourth largest consumer market in Asia Pacific in 2015. The national
capital Seoul was the largest consumer market in the country, followed by Gyeonggi-do and
Busan. Seoul is the hub of high-tech manufacturing and is home to leading banks and other
financial companies. Moreover, a highly skilled workforce and advanced technologies have
fuelled income and consumption growth among the residents. Businesses can target both the
middle classes and richest households in Seoul with a range of products and services such as
communications, luxury apparel, household and educational services;
Over the period of 2016-2030, the fastest growth in consumer spending is expected to be
registered by Gyeonggi-do, Incheon and Chungcheongnam-do. Both Gyeonggi-do and
Incheon have advanced export-orientated manufacturing facilities and the former is also
focusing on the information technology (IT) and tourism industries. This will drive growth in

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employment, disposable incomes and consumption going ahead. Chungcheongnam-do has a

large number of industrial complexes and investment in a number of industries across
automotive, iron and steel and petrochemicals that will fuel income and consumption growth
in this region. On an absolute basis, Gyeonggi-do will have the highest consumer expenditure
through to 2030, followed by Seoul and Busan;
Gyeonggi-do and Seoul will be the leading regions for consumer-focused businesses, due to
their status as industrial and commercial hubs, higher employment opportunities and affluent
consumers with high levels of discretionary spending.
Chart 6

Source:
Note:

South Koreas Consumer Market by Region

Euromonitor International from national statistics/UN/OECD

Data for 2016-2030 are forecasts

CONSUMER EXPENDITURE BY INCOME

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Household Goods and Communications Services Popular Among the

Middle Class
Household goods and services was the largest consumer spending category for decile 10
households, who accounted for over one fifth of the total spending on the latest household
gadgets in 2015. The richest households also spent on leisure, luxury apparel and
educational services, primarily for their children. Essentials, such as food and housing, were
the chief spending categories for decile 1 households. With rapid ageing of the population and
concentration of a large number of elderly citizens among poorer households, health goods
and medical services also witnessed significant demand. The middle classes spent most on
household goods, communications and health services apart from the essentials of food and
housing. This shows that companies offering the latest smartphones and tablets, as well as
innovative health solutions, will be in demand among these households;
Over the period of 2016-2030, discretionary spending of decile 10 households will grow the
fastest. Communications, premium clothing and household goods and educational services
will be in demand from this segment in the long run.
Chart 7

Consumer Spending by Income Type in South Korea

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Source:

Euromonitor International from national statistical offices/OECD

CONSUMER EXPENDITURE BY HOUSEHOLD

Businesses Look To Target Rising Numbers of Single-person
Households
South Korean households with children had the highest average consumer spending per
household in 2015. Couple with children was the largest household type in 2015 but by 2030
single-person households will be the largest in the country. Single-person households will also
record the fastest growth over the period of 2016-2030;
Single-person households are expected to surge, due to rapid ageing of the population, which
will lead to many senior citizens living alone, as well as delayed marriages and higher divorce
rates. This implies that businesses would have to provide convenient household products,

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including easy-to-use home appliances, communications, leisure and health services to cater
to this segment of consumers.
Chart 8

Source:

Spending by Household Type in South Korea

Euromonitor International from national statistical offices/OECD

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