30th Nov 2023

Household living standards fall in almost half EU countries

  • Basic living costs such as housing, transport and food rose three to four times faster than wages in 2022 (Photo: Unsplash)
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Household living standards have deteriorated in around half of EU countries, according to an advanced estimate of income inequalities by Eurostat.

While the EU unemployment rate remains at a record low of six percent, median disposable income in real terms (i.e. taking into account the rising cost of living) has fallen by two percentage points between 2021 and 2022.

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  • The median disposable income in real terms has fallen by two percentage points between 2021 and 2022 (Photo: Eurostat, 2023)

In other words, employment has remained robust, but households have less income to make ends meet.

European countries are still recovering economically and socially from the Covid-19 pandemic and the consequences of the war in Ukraine, which has pushed up energy and food prices in particular.

From 2021 to 2022, prices of basic goods rose by almost 17 percent at EU level. In countries such as Romania, Bulgaria, Portugal, Croatia and Spain, food prices alone contributed at least 30 percent to overall inflation.

The impact of the crisis has been felt more acutely in some countries, but particularly by low-income households, as basic goods account for a higher share of their total consumption.

This is reflected in the alarming number of people who are in work but do not earn enough to stay above the at-risk-of-poverty threshold.

This is known as in-work poverty, and according to the most recent data available, Romania, Luxembourg, Spain or Estonia had rates at least three percentage points above the European average, which stood at 8.5 percent in 2022.

Behind these figures is inflation, but also the number of hours worked, the type of work created (part-time, self-employed, low-paid, etc.) or the insufficient increase in wages to compensate for this rise in prices.

At EU level, basic living costs such as housing, transport and food rose three to four times faster than wages in 2022, according to a calculation by the European Trade Union Confederation (ETUC).

At the start of the year, real wages in Italy were down by more than seven percent on the previous year. Almost eight percent in Finland and more than 15 percent in Hungary, according to Organization for Economic Cooperation and Development (OECD) data.

The result is a loss of purchasing power for European workers, many of whom are even beginning to see that going on holiday is no longer an option and that securing a proper meal is becoming increasingly difficult.

"The cost-of-living crisis means many working people will struggle just to feed their children properly over the summer holidays, let alone think about a holiday or days out," ETUC general secretary Esther Lynch said after the publication of their new analysis of Eurostat data.

In Bulgaria, almost 45 percent of people at risk of poverty could not afford a meal with meat, fish or a vegetarian equivalent every second day. Similar figures are found in Romania and Slovakia.

In Croatia, Italy, Hungary and Greece, a higher proportion of workers — between 31 and 37 percent — will not be able to afford a holiday this summer.

"Far from being a break, this summer is shining a light on the profound inequality that exists in our economy and society," said Lynch.

Around 38 million workers in the EU will not be able to afford a week's holiday, as the price of a package holiday (designed to provide the best value holidays at home or abroad) has risen by 12.4 percent. This is the biggest increase since records began in 1996.

The price of a package of four nights or more is now €2,967, some €600 more than five years ago.

For the ETUC head, the key is for the EU and national leaders to tackle the problem at source.

How? "By imposing effective windfall taxes on the excess profits driving inflation and by strengthening collective bargaining to provide for wage increases as the best way to restore working people's purchasing power," Lynch said.

That is, by empowering workers and shifting the burden of inflation onto the shoulders of the corporations that have profited most from the price boom.


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