Median purchasing power continues to rise

16/09/2016 15:00
According to Statistics Netherlands (CBS), the purchasing power of the Dutch population improved 1.1 percent last year, less than the 1.8 percent increase in 2014. The percentage refers to the median increase. Changes in purchasing power may show significant differences at an individual level. Spending power of employees improved the most, while pensioners saw theirs decline.
Purchasing power development

Highest gain for employees

As the Dutch economy picked up in 2015, median purchasing power of employees improved the most with 2.5 percent. They benefited from the rise in collectively negotiated (CAO) wages and the better situation in the labour market. However, a rise in spending power does not necessarily mean that everyone’s financial situation is improving: last year, purchasing power declined for 35 percent of workers.

At 0.6 percent, the self-employed saw little improvement, although there were considerable individual differences. For one-quarter of self-employed, purchasing power decreased by at least 11 percent, but for another one-quarter spending power increased by nearly 14 percent or more. Social benefit recipients saw some improvement in 2015: those receiving income support gained 1 percent, the disabled 0.4 percent.

Marginal loss of spending power for pensioners

The purchasing power of pensioners fell slightly last year (0.1 percent), partly because indexation of supplementary pensions was limited or, in some cases, supplementary pensions were cut.

Development purchasing power if income does not change, 2015*

Last year, the spending power of pensioners was almost at the same level as in 2000, whereas the spending power of other groups increased over the period 2000-2015. How the purchasing power of pensioners develops largely depends on indexation of the general old age pension (AOW) and supplementary pensions as well as on tax measures. The spending power of other groups including those receiving social security and disablement benefits increased between 2000-2015. Self-employed and employees benefited the most. When the economy is thriving, workers often manage to improve their income position.

More spending power for pensioners on low incomes

Among the group of people receiving pensions, purchasing power changes varied widely in the period 2001-2015. Pensioners with little or no supplementary pension in addition to their AOW had less decline over the period 2009-2013 than retired people with high supplementary incomes. As a result, the purchasing power of the first group could exceed the 2000 level in 2015. Since the onset of the recession, supplementary pension benefits have been under pressure. Consequently, the spending power of pensioners with supplementary incomes above 10,000 euros has eroded.

Development purchasing power if income does not change*

More spending power for pensioners on lower incomes

Within the group of pensioners, the development of spending power varied strongly over the period 2001-2015. In the period 2009-2013, the loss of spending power of pensioners with little or no supplementary pension in addition to their AOW was less than for older people with high supplementary incomes. As a result, the purchasing power of the first group could exceed the 2000 level in 2015. Since the onset of the recession, supplementary pension benefits have been under pressure. Consequently, the spending power of pensioners with supplementary incomes above 10,000 euros has eroded.
Development purchasing power pensioners by amount supplementary pension*

Average income elderly significantly higher than in 2000

Generally, people retiring now on average enjoy higher incomes than their predecessors. One of the reasons is that - compared to earlier generations - more women have built up supplementary pension rights. Younger and better educated generations also had the opportunity to build up higher supplementary pensions. The number of well-to-do elderly is growing annually and at the same time the number of very old people living on small pensions is diminishing each year. As a result, in 2015, incomes of those over 65 were on average 9 percent higher in real terms than in 2000.