[Editorial] The Economy Is Booming on Paper, but Household Finances Remain Tight

The South Korean economy, riding the semiconductor supercycle, is maintaining strong growth. The KOSPI is also surging, setting new all-time highs day after day. But the reality felt by households is different. The gains from growth have not spread enough across households.
According to the Ministry of Data and Statistics, real household income in the first quarter of this year averaged 4.628718 million won per month, up just 0.4% from a year earlier. In effect, it was flat. By contrast, real GDP growth in the first quarter reached 3.6% from a year earlier, supported by strong semiconductor exports. The gap between macroeconomic indicators and household income growth is clear.
Industrial Activity Trends for April also showed a 'triple decline,' with production, consumption and investment all falling at once. In particular, the Retail Sales Index plunged 3.6%, a sign that consumption is freezing up. Even so, the KOSPI, buoyed by the semiconductor tailwind, set another record high that same day and moved closer to the 9,000 level. The contrast between the real economy and the financial market was stark.
These indicators show that while the South Korean economy is posting unexpected growth thanks to the semiconductor boom, that momentum is not spreading enough to households as a whole. In fact, real labor income fell, while real business income, which reflects earnings for the self-employed, rose only slightly. Income concentration is also deepening. The equivalized disposable income quintile ratio, a measure of income distribution, reached its highest level since 2020.
These concerns were, to some extent, anticipated from the start of the upturn. The semiconductor manufacturing industry is a classic capital-intensive sector. Even when production and sales rise, the effect on employment is limited. According to the Ministry of Data and Statistics, semiconductor manufacturing output rose 12.8% in the fourth quarter of last year, but jobs for wage workers increased only 1.9% from a year earlier.
This year, employees at Samsung Electronics and SK hynix will receive performance bonuses worth hundreds of millions of won, but that is limited to workers at a handful of large companies benefiting from the favorable industry cycle. Even if 'Samsung Electronics and SK Hynix' post astronomical profits, the gains are not spreading enough through consumption and employment. That is also why voices of relative deprivation are being heard across society.
Growth is accelerating, yet people are not feeling the benefits, and polarization is instead deepening. It has become urgent to create channels through which the gains from growth can flow across the broader economy. Some in the government are raising the idea of redistributing 'excess profits,' but that could undermine market principles.
Instead, policymakers should look for ways to generate a trickle-down effect from growth while preserving corporate autonomy, such as expanding investment by semiconductor firms' suppliers. They should also use the additional tax revenue generated by the semiconductor boom to support small and medium-sized businesses and stimulate domestic demand. Only when the semiconductor boom leads not just to better earnings for a few companies, but to growth that most people can feel, will the meaning of a 'supercycle' truly be complete.