Purchasing power in the Caribbean Netherlands declined in 2022

In order to improve people’s sense of socio-economic security in the Caribbean Netherlands, since 2019 steps have been taken to increase minimum wages and the benefits paid to pensioners (AOV), widows/widowers and orphans (AWW) and people receiving income support, in order to improve purchasing power. In 2022, benefits and the minimum wage were increased to reflect inflation in 2021, but also by an additional amount. Child benefit was also increased once again, and households receiving income support were given an energy allowance. However, for the general population, these measures were not enough to make up for the average increase in prices in 2022. Inflation stood at 9.7 percent on Bonaire, 7.7 percent on St Eustatius and 8.6 percent on Saba. Median purchasing power fell on all three islands in 2022, following ten years of almost continuous increases.

Improvement in purchasing power for those receiving benefits

Households receiving income support also received an energy allowance in 2022 to help cover higher energy bills. In addition, benefits were increased. On Bonaire and St Eustatius, this led to an improvement in the median purchasing power of benefits recipients, which increased by 2.2 and 2.5 percent, respectively. But on all three islands, median purchasing power declined for people in households that derive their primary income from paid employment. The fall in purchasing power among working people was the highest on Bonaire, at 4.9 percent. Among working people on St Eustatius and Saba, purchasing power fell by 4.1 percent and 1.7 percent, respectively.

When median purchasing power falls, this does not necessarily mean that everyone loses out. For example, purchasing power improved for at least 40 percent of islanders in 2022. Over 90 percent of residents of the Caribbean Netherlands are members of households that derive their income primarily from work. Despite the decline in the median purchasing power of this group, around 2 in 5 working people saw an improvement in their purchasing power. Conversely, the increase in median purchasing power among benefits recipients, who make up only 10 percent of the population, does not necessarily mean that the position of everybody in those households improved. What we can say is that a higher proportion of this group saw their position improve when we compare it to working people. On St Eustatius, 3 out of 4 persons in households reliant mainly on benefits for their income saw their position improve.

Couples with children on Saba saw an improvement

On Saba, the purchasing power of couples with children improved by 0.5 percent in 2022. For those in all other types of households, purchasing power declined on all three islands. On Bonaire and St Eustatius, purchasing power declined the least among single persons and single-parent families. Couples without children on Bonaire saw the largest decline in purchasing power, at 5.8 percent.

Purchasing power up for lower-income groups on St Eustatius

On St Eustatius, purchasing power among people in households in the lowest income quartile rose by 0.4 percent. This was due to the increase in benefits and the energy allowance. On Bonaire and Saba, the median purchasing power of this group fell, but by less than among people in higher income groups. On all three islands, people in the highest income group lost out the most on average. Even so, purchasing power still improved for about 1 in 3 people in these households.

Decline in purchasing power across all age groups

There was a decline in purchasing power among people in all age groups. On Bonaire, the largest decline was among those aged 40-59, who saw their purchasing power fall by 4.8 percent. On Saba, those aged 60 and over lost out the most, at 2.5 percent.