The Median Disposable Income in the EU Romania, third place from the rear but first when it comes to include pensions in the social transfers
In 2022, the median disposable income was 18.706 PPS per inhabitant in the EU, one-third of it was received as social transfers from governments (e.g. pensions, social benefits, etc.). Compared with 2010, EU’s median disposable income in real terms increased by 20% in 2022. Romania was first among the member states, with a 126% increase.
EU median annual disposable income per inhabitant stood at 18.706 PPS in 2022. It varied considerably across the EU Member States and ranged from 9.671 PPS in Bulgaria and 9.826 PPS in Slovakia to 33.214 PPS in Luxembourg and 25.437 PPS in the Netherlands. The highest levels of income per inhabitant were recorded in Central and Nordic EU Member States. Romania was placed third place from the rear (10.033 PPS), although the level of GDP per inhabitant is currently above the ones in other six European countries. This signifies an increased inequality in relative terms.
In 2022, the Gini coefficient for the EU was 29.6. In 2022, the highest levels of inequality in terms of disposable income in the EU were in Bulgaria (38.4), Lithuania (36.2) and Latvia (34.3). On the other hand, among the EU Member States, income was most equally distributed in Slovakia (21.2), Slovenia (23.1), Czechia (24.8) and Belgium (24.9). So, three former member states of the eastern bloc are at both ends of the spectrum in this regard, underlining the differences in the social policies implemented.
The threshold between 31.0 to 33.9 comprised Malta, Greece, Estonia, Spain, Portugal, Romania and Italy. This gives us a solid indication from the socio-cultural perspective that our country is both Latin and Balkan.
It is interesting to compare the level of social transfers across the EU Member States including and excluding pensions. In Estonia, social transfers including pensions in 2022 were only around 1.5 times higher than social transfers excluding pensions. By contrast, in Romania, the value of social transfers including pensions was 7.4 times higher than social transfers excluding pensions. For reference, this is higher than in Greece, Portugal or Croatia, where social transfers including pensions were respectively 6.7, 5.6 and 4.5 times higher than transfers excluding pensions.
In 2022, the total median annual disposable income per inhabitant in the EU was 18.706 PPS. For the EU as a whole, social transfers (including pensions) resulted in an increase of 5.416 PPS per inhabitant of the median disposable income, with social transfers other than pensions contributing to 1.537 PPS.
Among the EU member states, there were considerable variations in the contribution made by social transfers to median disposable income in 2022. The largest transfers were observed in Luxembourg, where social transfers (including pensions) increased the median disposable income by 8.395 PPS per inhabitant. Social transfers (including pensions) were also relatively high in Austria (7.501 PPS) and France (7.069 PPS).
A somewhat different pattern emerges if pensions are excluded from the analysis. In 2022, social transfers other than pensions contributed more than 2.500 PPS per inhabitant to median disposable income in Belgium (2.969 PPS) and Luxembourg (2.656 PPS).
In the EU, most Member States reported a rise of the median disposable income in real terms between 2010 and 2022. Romania led the real disposable income ranking with an index of 226, reflecting an increase of more than double since 2010.
Lithuania was next with 200, followed by Estonia at 193 and Latvia at 192. By contrast, Greece had the lowest index at 74, indicating a decrease from 2010. Two of the four biggest economies in the Union, Spain and France, were just below the 2010 benchmark at 99, while Cyprus matched it at 100, and Italy, the third EU economy, slightly surpassed it with 101. With Germany at an index of 112, that gives as an indication of the gap that Romania closed in the last 12 years, ahead of the other new members, in the context of stagnation of almost all the major western countries.
The income in real terms shows the annual evolution of households’ purchasing power following the financial crisis of 2008. Conversion to “real terms” is computed using, as a price deflator, the Harmonised Index of Consumer Prices (HICP) of the income year reflected in the median equivalised disposable income (i.e. the HICP of the “survey year – 1”). The indicator is expressed as an index (with index at 100 for base year = SILC 2010). In 2022, the disposable income in real terms in the EU was at an index of 120. This indicates that, on average, there has been a real increase of 20% of the disposable income since 2010. The data used in this article are derived from EU statistics on income and living conditions (EU-SILC). EU-SILC data are compiled annually and are the main source of statistics that measure income and living conditions in Europe.
Photo source: PxHere.
