€6,247 in 2020

Disposable income, risk of poverty up

In 2020, the average disposable income of Luxembourg households was 6,247 euros according to Statec. (Photo: Jobs.lu/Archives)

In 2020, the average disposable income of Luxembourg households was 6,247 euros according to Statec. (Photo: Jobs.lu/Archives)

The average disposable income per household increased by 9.3% between 2019 and 2020 according to Statec and the figure for 2021 is expected to rise further to €6,421. At the same time, the at-risk-of-poverty rate is increasing and could rise to 19.2% in 2021.

The covid-19 pandemic did not cause household’s disposable income to fall, according to the latest Statec figures, published on 14 September. On the contrary, the average has risen from €5,716 per month in 2019 to €6,247 in 2020. The statistical institute projects a further increase for the 2021 figures, to an income of €6,421.

Delano’s sister publication Paperjam has contacted the institute for a clearer definition of what makes up “disposable income”. In the questionnaire used for this EU-Silc survey, which was carried out in around 4,000 households, Statec asks participants about their salaries, bonuses, benefits in kind, pensions, allowances, education grants or any other type of income that may be received, including things like alimony. In France, the INSEE defines disposable income as the income "available to the household for consumption and saving.” It includes income from employment net of social security contributions, unemployment benefits, pensions, income from property (real estate and financial) and other social benefits received, net of direct taxes.

An increase especially for high earners

The increase in income concerns all households, says the Statec, "even if it is above all the high earners who are recording the strongest increases". The income of the most vulnerable households has risen thanks to the doubling of the cost-of-living allowance, the increase in the minimum social wage and the automatic wage indexation of 2020.

The income of the richest 20% was on average 4.6 times higher than that of the least well-off 20% in 2020. The difference is 0.4 percentage points smaller than in 2019. The richest 10% have an income 7.1 times higher than the poorest 10%, a drop of one point compared to 2019.

But the increase in income is accompanied by an increase in the risk of poverty. The poverty line is estimated at €2,117 per month for 2020 and €2,177 in 2021, compared with €1,942 in 2019. The rate of households at risk of falling below it is 18.3% in 2020. This is 0.9 points higher than in 2019. In 2021, it could increase to 19.2% according to the forecasts.

This story was first published in French on Paperjam. It has been translated and edited for Delano.