The KR Household Economic Condition Index (KR-ECI) 2021 fell from 37.3 in May to 36.7 in June, while the 3-month Expected KR-ECI in June 2021 also dropped from 39.4 to 38.9 over the same period, suggesting that households were still concerned about the rising cost of living. Uncertainties about COVID-19 containment measures have led to a significant decline in household perception of income and employment from the previous month.
Although a survey of institutional employment shows that layoffs are beginning to decline compared to the same period of last year, other components such as reduced overtime hours or temporary pay cuts rather than layoffs tend to increase. These are in line with the findings of an additional survey which show that most households experienced a decline in income during the COVID-19 outbreak, causing them to begin adjusting their spending behavior. KResearch conducted further a survey about the impact of this wave of the COVID-19 pandemic on households’ income, with the result showing that more than half (51.2%) of the households surveyed experienced a decline in income, affecting their purchasing power or spending behavior. The decline in income was countered by starting to reduce unnecessary expenses (47.7%) and purchase consumer goods in smaller amounts (22.7%).
Looking ahead, the KR-ECI still faces high uncertainty, as the uncontrollable COVID-19 situation will continue to depress the labor market and households’ purchasing power. The longer COVID-19 protracts, the more it affects the overall economy and confidence in various sectors. Therefore, the government should now clarify measures to control the pandemic, including introduction of relief measures for businesses and households, as well as procurement and distribution of effective vaccines to quickly contain the outbreak.
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