'Human New Deal' to Broaden Middle Class

By Na Jeong-ju
Staff Reporter

The government announced a set of measures to support the middle class, Monday, saying the economic crisis has sharply increased the cost of living, and education and medical service bills for ordinary people.

The program, named the Human New Deal, calls for efforts to protect middle-income workers from the crisis, as well as support low-income families to help them improve their standard of living, according to the Presidential Council on Future and Vision.

``At this tough time, most countries see a contraction or collapse of the middle class. It is an unprecedented phenomenon,'' President Lee Myung-bak said during a meeting with council members. ``It is important to bring people out of poverty. And more important is to prevent people falling down to the lowest class.''

The council said the Human New Deal program is necessary so that the country can overcome the economic crisis at an early date with a strong middle class, and then improve long-term growth potential.

The plan focuses on developing the middle class and also includes support for those seeking to launch small businesses to keep the unemployment rate down.

Public education will also be strengthened as part of efforts to cut the link between poverty and learning opportunities.

``Considering the need to significantly reduce the money spent on private education that currently places huge financial burdens on households, the government decided to work toward an education system where private education is no longer needed,'' the council's Chairman Kwak Seung-joon told reporters.

The meeting was also attended by Jason E. Bordoff, a project policy director at the Brookings Institution, who said the new program was very ``timely.''

Bordoff also noted the social program resembled that of the United States, where the Obama administration seeks to bring up to 95 percent of all Americans into the middle class, according to the council.

The state-run Korea Development Institute (KDI) reported that middle-class households ― those who earn between 50 and 150 percent of the country's average income ― fell from 68.5 percent in 1996 to 61.9 percent in 2000 and 54.5 percent in 2006.

The upper class makes above 150 percent of the median earnings, while those earning less than 50 percent are defined as the low-income class.

Many economists say figures for middle-class households have probably fallen further over the past couple of years although exact data has yet to be tallied.

The KDI also reported the income gap between the haves and have-nots has widened.
``Following the Asian financial crisis, the number of working middle-class households dropped as many businesses went bankrupt and workers lost their jobs. The majority of them then opened restaurants and other small businesses to make ends meet, but their financial condition worsened on prolonged sluggish business conditions,'' according to the institute.

Many of the working middle class fell into poverty because of falling income amid the tight job market, while the rich became richer through stock and real estate investments, the institute noted.

``The previous Roh administration introduced a range of welfare programs aimed at narrowing the income gap between the rich and the poor. But the disparity has widened and the number of middle-class families has decreased as those who are in need did not benefit much from state support schemes,'' it said.

jj@koreatimes.co.kr