Real disposable income down four years in a row

The real disposable income of Dutch households was 0.7 percent lower in 2005 than in 2004. It was the fourth year in a row that real disposable income fell. In the period 1996 – 2001 it still rose every year. The disposable income of households amounted to 235.4 billion euro in 2005.

Real disposable income

Primary income up

Primary income amounted to 319.5 billion euro in 2005; this was 2.3 percent more than in 2004. Primary household income consists of income received from direct participation in the labour process (as an employee or self-employed) plus net income from capital (interest, dividends etc.). In 2005, employee wages accounted for nearly 80 percent of this primary income. As a result of wage restraints and a slightly lower number of employees, wages rose by only 0.7 percent. Income of the self-employed rose by nearly 5 percent, while income from capital rose by no less than 12 percent, mainly as a result of increasing income from dividends.

Disposable income up by less than primary income

Disposable income up by less than primary income

Although primary income rose by 2.3 percent in 2005, paid taxes and social security premiums  rose by more than benefits received. As a result, disposable household income grew by only 1.0 percent. After correction for inflation, it even fell by 0.7 percent. This made 2005 the fourth year in succession that real disposable income decreased.

Taxes, premiums and benefits, 2005

Hilbert van Dijk and Jan Ramaker