Purchasing power in the Caribbean Netherlands declined in 2022, partly due to high inflation. Statistics Netherlands CBS reported this last week on the basis of new figures.
KRALENDIJK--Purchasing power in the Caribbean Netherlands declined in 2022, partly due to high inflation. On Bonaire, purchasing power declined by 4.2% compared to 2021, on St Eustatius by 3.3% and on Saba by 1.6%. However, people receiving benefits on Bonaire and St Eustatius actually saw their purchasing power improve due to increases in those benefits and an energy allowance. Statistics Netherlands CBS reported this last week on the basis of new figures.
To improve people’s purchasing power, steps have been taken since 2019, to increase minimum wages and the benefits paid to pensioners AOV, widows/widowers and orphans AWW and people receiving income support. In 2022, benefits and the minimum wage were increased to reflect inflation in 2021, but also by an additional amount. Child benefit was also increased once again, and households receiving income support were given an energy allowance.
These steps were all aimed at improving people’s sense of socio-economic security in the Caribbean Netherlands. However, for the general population, these measures were not enough to make up for the average increase in prices in 2022, data shows. Inflation stood at 9.7% on Bonaire, 7.7% on St Eustatius and 8.6% on Saba. This resulted in a decrease of average purchasing power on all three islands in 2022, following 10 years of almost continuous increases.
Households receiving income support also received an energy allowance in 2022 to help cover higher energy bills. In addition, benefits were increased. On Bonaire and St Eustatius, this led to an improvement in the average purchasing power of benefits recipients, whose purchasing power increased by 2.2% and 2.5%, respectively.
But on all three islands, average purchasing power declined for people in households that derive their primary income from paid employment. On Bonaire, the fall in purchasing power among working people was the highest, at 4.9%. Among working people on St. Eustatius and Saba, purchasing power fell by 4.1% and 1.7%, respectively.
However, when average purchasing power falls, this does not necessarily mean that everyone loses out, CBS says. For example, purchasing power improved for at least 40% of residents in the Caribbean Netherlands in 2022. More than 90% of residents are members of households that derive their income primarily from work. Despite the average decline in the purchasing power of this group, around 2 in 5 working people saw an improvement in their purchasing power.
Conversely, the average increase in purchasing power among benefits recipients, who make up only 10% of the population, does not necessarily mean that the position of everybody in those households improved in 2022.
What CBS can say is that a higher proportion of this group saw their position improve when compared to working people. On St. Eustatius, 3 out of 4 persons in households reliant mainly on benefits for their income saw their position improve. On Saba, the purchasing power of couples with children improved by 0.5% in 2022.
For those in all other types of households, purchasing power declined on all three islands. On Bonaire and St. Eustatius, purchasing power declined the least among single persons and single-parent families. Couples without children on Bonaire saw the largest decline in purchasing power, at 5.8%. On St Eustatius, purchasing power among people in households in the lowest income quartile rose by 0.4%. This was due to the increase in benefits and the energy allowance. On Bonaire and Saba, the average purchasing power of this group fell, but by less than those in higher income groups.
On all three islands, people in the highest income group lost out the most on average. Even so, purchasing power still improved for about 1 in 3 people in these households.
There was a decline in purchasing power among people in all age groups. On Bonaire, the largest decline was among those age 40-59, who saw their purchasing power fall by 4.8%. On Saba, those age 60 and over lost out the most, at 2.5%.
In 2022, the Dutch government raised the statutory minimum wage and benefits, including the state pension AOW, widows’/widowers’ and orphans’ allowance AWW and income support in the Caribbean Netherlands by 10%.
This increase included an adjustment for inflation, supplemented by an additional increase for each island determined by government policy. For Bonaire, St. Eustatius and Saba, inflation stood at 4.3%, 2.4% and 3.2%, respectively (for Q3 2021).
On top of that there was an additional policy-based increase of 5.7% for Bonaire, 7.6% for St. Eustatius and 6.8% for Saba. Child benefit was equalised to US $89 per child per month for all three islands, with effect from January 1, 2022. This was increased to $99 per child per month with effect from July 1, 2022.
Furthermore, and in line with the scheme introduced in the European Netherlands, the government introduced a one-off energy allowance to support low-income households in the Caribbean Netherlands. Households with an income of up to 130% of the social minimum benchmark were entitled to an allowance of $1,300. Households on income support received the energy allowance automatically. Other households needed to apply for the energy allowance and did not receive any payment until 2023.
Changes in purchasing power are calculated as year-on-year percentage changes in a person’s standardised disposable household income, adjusted for price changes, CBS explains. These percentage-based income changes are ranked from smallest to largest, with the “middle” or median value reflecting the change in purchasing power for the relevant population group or sub-group.
Personal (dynamic) purchasing power can change for all kinds of reasons. For example, a person’s income can change as a result of a wage increase, promotion, or starting a (new) job or retiring. Changes in household composition (e.g. a child leaving the parental home or a couple separating) may also result in income changes. All these changes are reflected when dynamic purchasing power is calculated. For 2022, purchasing power was calculated for the same population group as in 2021.
The mean standardised disposable income was calculated for each household member for the years 2021 and 2022. Classification into income quartiles is based on these mean values for 2021 and 2022. This is adjusted for regression-to-the-mean effects. The income quartiles were calculated for each island individually.
