CBS: more purchasing power for Dutch Caribbean residents in 2019

In 2019, the purchasing power of the Caribbean Dutch population increased compared to the previous year. This was mainly due to the increases in wages, child benefits, the statutory minimum wage, and benefits. On St Eustatius and Saba, residents benefited from a median increase of 4.9 percent relative to 2018, on Bonaire this was 3.9 percent. Benefit recipients and single-parent families gained the most. Statistics Netherlands (CBS) reports this based on newly released figures.

From 2012 to 2017 inclusive, the median purchasing power in the Caribbean Netherlands rose each consecutive year. In 2018, average price levels on Bonaire and Saba increased more rapidly than incomes on these islands, which lowered the purchasing power. In 2019, a number of steps were taken to improve livelihood security, boosting spending power for residents on all three islands. For example, the reduction in employer premiums for employee insurance allowed for wage increases. Benefits and the statutory minimum wage were raised as well.

 

The median purchasing power of persons living in households mainly depending on income from employment improved the most on St Eustatius at 4.8 percent. A median increase of 4.8 percent in 2019 means that half of the population saw their spending power rise by at least 4.8 percent and the other half by less than 4.8 percent. Persons on Bonaire living in households that were mainly dependent on benefits experienced the highest purchasing power growth, i.e. 7.2 percent. One in five persons in these households suffered a loss of purchasing power.

Highest purchasing power gain among households with children

On all three islands, the median purchasing power rose for all types of households. Due to the raised child benefit, the purchasing power increased particularly strongly among persons in households with underage children, especially for persons in single-parent families, namely 8.2 percent on Bonaire, 7.4 percent on St Eustatius and 9.4 percent on Saba. For less than one in three persons living in single-parent families, spending power declined.

Young people benefit most

On all three islands, the purchasing power rose across all age groups. For persons up to age 40, the increase amounted to 4.8 percent, 5.9 percent, and 7.0 percent on Bonaire, St Eustatius, and Saba respectively. These people are still in the process of building their careers. The households they belong to often include children. These persons benefited from the wage increase as well as the child benefit increase.

Sharpest spending power increase for low-income households on Bonaire

In 2019, spending power rose across all income groups. On Bonaire and St Eustatius, the median purchasing power improved the most for persons in households in the lowest-income quartile, with increases of 7.0 and 5.4 percent respectively. On St Eustatius, an increase was seen among households in the highest-income quartile at 5.3 percent.

Source
StatLine – Caribbean NL; purchasing power development persons in private households

https://opendata.cbs.nl/statline/#/CBS/en/dataset/83551ENG/table?dl=37D92

Explanation

Purchasing power development

Purchasing power developments per person are calculated as year-on-year percentage changes in that person’s standardized disposable household income, adjusted for price changes. These percentage-based income changes are ranked from high to low, with the middle or median value reflecting the purchasing power development of that particular (sub)population. Personal (dynamic) purchasing power may fluctuate for all kinds of reasons. For example, a wage increase, a promotion, taking up of a (new) job, retirement. Furthermore, changes in household composition (e.g. a child moving out or a couple separating) may also result in income changes. All these changes are reflected in the dynamic purchasing power development.

Income groups

The mean standardised disposable income is calculated for each household member over 2018 and 2019. The classification into income quartile groups is based on these averages over 2018 and 2019. This is the so-called adjustment for regression-to-the-mean effects.

Improvement of livelihood security

In 2019, the Ministry of Social Affairs and Employment (SZW) initiated the structural reduction in employers’ premiums for employee insurance. This allows employers to increase wages without increasing their wage costs. In 2019, the premiums fell from 18.3 to 13.4 percent. Depending on whether the employer paid pension contributions, this resulted in a wage increase of between 3.4 and 4.4 percent. Statutory minimum wages were raised by 5 percent and benefits such as the ‘Onderstand’ (income support), AOV (statutory pension) and AWW (widow, widower and orphan pension) were increased by an additional 5 percent on top of the annual indexation.

Increase in child benefit

In 2019, child benefit was raised by more than 50 percent. On Bonaire, the monthly amount per child rose from 40 to 62 US dollars. On St Eustatius and Saba, the monthly amount went up from 42 to 64 US dollars per child.

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