Purchasing power rose by 0.3 percent in 2023

The figures in this report relate to changes in median purchasing power. Median means that half the population (or population group) will have seen a lower increase in purchasing power, while the other half will have seen an equal or higher increase.

Smaller increase in purchasing power among those on higher incomes

Purchasing power rose the most for the 10 percent of the population on the lowest incomes, at 1.7 percent. The higher the income group, the smaller the increase in purchasing power. For the 20 percent of people on the highest incomes, there was actually a drop in purchasing power. Those on the very highest incomes saw a drop in purchasing power of 1.5 percent.

Lower-income households benefited more from the measures put in place to compensate people for higher inflation in 2023. On 1 January 2023 the minimum wage was increased, for instance, and there were corresponding increases in welfare benefits and the state pension. Child-related benefits were also increased significantly, and lower-income households received more in healthcare benefit. Finally, as in 2022, an energy allowance was paid and the energy price cap was also in place. This package of measures meant that those living on welfare benefits saw an increase in their purchasing power of 2.2 percent compared to 2022. Workers on relatively low incomes also enjoyed higher purchasing power as a result of these measures.

These measures were offset by other changes that led to a fall in purchasing power which affected higher earners more. There were tax increases on savings and investments, for example, and self-employed people paid more income tax. Partly as a result of this, purchasing power fell by 1.8 percent among self-employed people.

For pensioners, the package of measures meant a drop in purchasing power in most cases. Only pensioners who rely mainly on the state pension saw their purchasing power rise slightly in 2022.

Those in the lowest income decile derive their income from various sources

The lowest income decile in the Netherlands includes both people in employment and people who receive various social benefits. Nearly all welfare recipients are in this lowest-income group. It also includes many pensioners, and specifically pensioners who receive no (or relatively little) supplementary pension on top of their state pension. Most people who live in pensioner households are found in the second, third and fourth income deciles. They become increasingly scarce in the higher income deciles. These are dominated by people in employment, who make up 75 to 90 percent of the higher income deciles. Self-employed persons also make up a relatively large share of the top income decile.