Higher purchasing power for employees in care sector

03/06/2014 15:00
  • Annual increase purchasing power employees sector health care and welfare over the period 2008-2012
  • Loss of purchasing power most dramatic for self-employed and pensioners
  • Young households cut most on spending
  • Personal wealth over-65 households remains stable

Today, Statistics Netherlands announced that the recession which has persisted since late 2008 has undermined the financial position of households. For the third year in a row, they lost purchasing power in 2012. The situation was less dramatic for employees. In fact, the purchasing power of people employed in the sector health care and welfare improved. For self-employed and benefit recipients, especially pensioners, the loss of purchasing power was dramatic. Household spending decreased, most in households where the main breadwinner was under the age of 45. Unlike in younger age categories, the personal capital of over-65 households was not reduced. Data are based on the publication Prosperity in the Netherlands 2014. This publication provides a picture of the distribution of incomes and recent income developments, spending patterns and wealth in various strata of Dutch society.

Modest loss of purchasing power employees

Unemployment increased as a result of the recession, participation on the labour market decreased and the number of benefit recipients grew. In the working population, self-employed faced difficult times. They already lost purchasing power in 2009 and their purchasing power eroded further (2.7 percent) in 2012. Proportionally, employees were the least affected. In 2010 and 2012, their purchasing power was reduced by 0.2 and 0.4 percent respectively. This reduction is mainly due to the fact that collectively negotiated wage agreements did not at all or only partly compensate for inflation. The purchasing power of benefit recipients, for example, was seriously affected. Pensioners lost purchasing power for the third year in a row (1.2 percent); people living on social security lost 1.5 percent.

More purchasing in sector health care and welfare

People employed in the sector health care and welfare gained purchasing power. Their purchasing power improved annually due to the positive effect of collectively negotiated wage agreements over the period 2008-2012.  People employed in the sectors education and financial services also achieved fairly positive results with respect to their purchasing power. Their purchasing power improved significantly during the first years of the recession. The same applies to people employed in the sector health care and welfare. In 2009, for example, the purchasing power in these sectors grew by 5.2, 3.2 and 3.7 percent respectively. In later years, developments were less positive. The purchasing power of employees in education, for example, declined since 2011 and for employees in the sector financial services in 2012.

Young households spend less

Between 2008 and 2012, average household spending, based on prices of 2012, fell from 33.8 thousand euros to 31.6 thousand euros. Adjusted for price developments, household spending declined by 7 percent over the period 2008-2012.
Young households largely accounted for the reduction. Between 2008 and 2012, for example, real spending by households with main breadwinners under the age of 45 fell by more than 13 percent. In households with main breadwinners aged between 45 and 65, the reduction was nearly 2 percent less. Over-65 households, on the other hand, spent 4.4 percent more on goods and services. In the period 2008-2012, more younger generations joined the category over-65 households. These younger generations more often have supplementary pensions and, consequently, more purchasing power than older generations. The increase is directly caused by the higher participation rate of women on the labour market.

Over-65s do not lose personal wealth

The average personal wealth level of households was reduced from 51 thousand euros in 2008 to 27 thousand euros in 2012 caused by the depreciation of house prices. Nearly six in ten households own the house they live in. As a result of the slump on the housing market, the average value of owner-occupied residential property was reduced from 256 thousand euros to 231 euros in the period 2008-2012. At the same time, the mortgage debt of home owners grew from 143 thousand euros to 163 thousand euros.
Households in the age category 25-64 entirely account for the overall reduction in wealth. On average, the category of households with breadwinners older than 65 was spared. This age category includes many home owners who have largely paid off their mortgage debts, which compensated for the negative effect of the house value depreciation on the average.