2023-12-26 09:02:27
Household income is no longer a good indicator of poverty. Salaries and allowances increased for many households last year. Yet aid organizations saw more and more people knocking because they might no longer make ends meet.
This year, the National Children’s Aid Fund received an average of 120 requests for assistance every day. That is 20 percent more than a year earlier. One in eight applicants comes from a household where at least one person has paid work.
A spokesperson for the fund calls the increase “bizarre”. “It scares me.” And the group of working poor who are knocking on the door for help is growing. Children’s Aid provides, among other things, warm coats, duvets and Sinterklaas gifts to families who cannot afford them themselves.
At the same time, Dutch people are increasingly less likely to fall into poverty, statistics agency CBS calculated in November. The number of people with an income below the poverty line has been declining for almost ten years.
In addition, the minimum wage and benefits increased by 10 percent at the beginning of 2023. Benefits also increased. And employers increased salaries in collective labor agreements by an average of 7.4 percent over the course of this year.
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‘Not making ends meet is not the same as poverty’
How is it possible that toy banks were unprecedentedly busy this December? That more people were struggling with rising debts this year? And that bills for fixed costs were increasingly being paid late?
“Poverty is not just regarding income. It’s also regarding expenditure,” says poverty expert Nadja Jungmann. “You don’t have to be poor to not be able to make ends meet.”
Households with an average income will no longer make it to the end of the month due to rising costs. Energy bills have risen, food has become more expensive and housing costs a lot of money.
“People are getting divorced and children want to move into rooms,” says Jungmann. These groups sometimes spend a large part of their income on housing. If energy becomes even more expensive, or they become ill, they might simply go under financially.
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Poverty line is too low
The poverty line used to measure poverty is therefore too low, the Social Minimum Committee concluded earlier this year. The amount of social assistance is determined on the basis of the so-called social minimum.
But most households can no longer make a decent living on that. Couples with children who have to live on social assistance quickly find themselves short of hundreds of euros per month.
“We have become on average 30 percent more prosperous in the past 45 years,” says poverty expert Anna Custers. “But the purchasing power of low-income households has remained roughly stable since the mid-1980s.”
The increase in the minimum wage has “certainly contributed” to reaching low income groups, Custers says. But it was just enough to compensate for inflation, while much more overdue maintenance is needed to make this group financially healthy.
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High surcharges are risky
One of the buttons the government turns to prevent poverty is the benefits system. This year, for example, there was an energy surcharge for low-income households. Rent allowance and healthcare allowance also increased. “People certainly felt that in their wallets,” says Custers. But benefits also make people vulnerable.
In 2023, this concerned temporary increases in allowances. In addition, a higher surcharge also entails a greater risk. “If surcharges are higher, recoveries may also be higher,” says Custers.
In this way, the government can also pose a threat to the financial health of Dutch people. “The debt problem has increased this year,” says Custers. This is partly due to the benefits that people have to pay back because they have started earning more.
Another important part of the larger debt problem is overdue payments to the tax authorities. During the corona pandemic, the Tax Authorities paused certain claims. Everyone now has to pay taxes once more, even retroactively. Custers: “These recoveries cause problems on household budgets that are already tightly adjusted.”
Are we climbing out of the valley?
The outgoing cabinet will allocate 2 billion euros for 2024 to help the lowest income groups. This money will go towards increasing the housing allowance and the child budget, among other things.
The question is whether that is enough. According to the Social Minimum Committee, 6 billion euros are needed to solve households’ money problems.
“We hold our hearts for the small, childless households,” says a Nibud spokesperson. In January, the budget advisor will present how different types of households will fare financially.
“It also largely depends on someone’s personal situation whether the national measures will help make ends meet,” says Jungmann. One Dutch person ends up living in a poorly insulated house, the other because of medical problems.
At the same time, there are certainly signs that we are climbing out of the valley. People were slightly less gloomy in December regarding both the economic climate and willingness to buy, according to figures from CBS. For the first time since October 2021, consumers were cautiously positive regarding their financial situation in the next twelve months. Custers: “We may be at a tipping point.”
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