Households - statistics on disposable income, saving and investment
Data extracted in July 2019.
Planned update: July 2020.
Wages accounted for 36.1 % of the EU’s household disposable income in 2017, and social benefits for 24.4 %.
In 2017, the household saving rate was 9.6 % in the EU-28 and 11.8 % in the euro area.
The EU’s household investment rate was 8.2 % in 2017, with double-digit rates recorded in Finland, the Netherlands, Cyprus, Belgium and Luxembourg.
Gross household saving rate, 2007-2017
This article focuses on disposable income, saving and investment for households in the European Union (EU) and the euro area; note there are complementary articles that provide information for financial assets and liabilities for households and for non-financial corporations and investment and the distribution of profit for non-financial corporations.
It presents Eurostat statistics derived from European sector accounts, which form part of the European system of national and regional accounts (ESA 2010). Data are provided for the EU-28 and the euro area, as well as for individual EU Member States, three EFTA countries, Turkey, Japan and the United States for the latest reference year available and for developments over the previous 10 years.
This article provides a range of analyses that impact on our everyday lives, detailing levels of gross household adjusted disposable income that is available for people to manage their budget. Overall household spending and/or saving are closely linked to general macroeconomic developments, including among others, real wage growth, inflation and the risk of unemployment. Note data presented in this article cover both the household sector and non-profit institutions serving households (NPISH); the latter is a relatively small institutional sector that includes charities, trade unions, religious and political groups.
Gross disposable income is the result of all current transactions before consumption, excluding exceptional resources/uses such as capital transfers, holding gains/losses and the consequences of natural disasters. It reflects the net resources, earned during the period, which are available for consumption and/or saving; in this article (unless otherwise stated), it is adjusted to take account of social transfers in kind. Adjusted gross disposable income includes the flows corresponding to the use of individual services which households receive free of charge from the government; these mainly include education, health and social security services, as well as housing, cultural or recreational services.
Gross household adjusted disposable income
The EU-28’s gross household adjusted disposable income was valued at EUR 11 363 billion in 2017, which was equivalent to approximately three quarters (71.5 %) of the value of gross domestic product (GDP). Germany accounted for the highest share of the EU-28’s gross household adjusted disposable income, 21.2 % of the total, followed by the United Kingdom (16.1 %) and France (15.8 %).
Figure 1 shows information for gross household adjusted disposable income per capita during the period 2007 to 2017; note that the series shown may be affected by changes in population numbers from one year to the next (as a result of natural change and changes that may be linked to migration). The most striking aspect of Figure 1 is the sudden reduction in gross household adjusted disposable income per capita as a result of the global financial and economic crisis. This was especially apparent in real terms, suggesting that increases in the standard of living enjoyed by many people living in the EU-28 and the euro area slowed between 2007 and 2009 and turned negative during the years from 2010 to 2013. Since 2014, there has been an upturn in economic fortunes in both the EU-28 and the euro area, with gross household adjusted disposable income per capita increasing in both nominal and real terms (in 2016, there was no nominal change in the EU-28).
Gross household adjusted disposable income per capita in Luxembourg was 3.0 times as high as in Bulgaria
To compare gross household adjusted disposable income per capita across countries effectively, a correction should be made to take account of price level differences. To do so, data are converted into purchasing power standards (PPS).The presentation in Figure 2 is based on data in PPS, but with the values then converted to a ratio between the values for each EU Member State and the EU-28 average, with the ratio for the EU-28 average set = 100. Figure 2 shows that in 2017, gross household adjusted disposable income per capita varied substantially between Member States: in Luxembourg the average level of gross household adjusted disposable income per capita was 3.0 times as high as that recorded in Bulgaria. Note however that a similar comparison for 2007 — just 10 years earlier — reveals that gross household adjusted disposable income per capita in Luxembourg had been 4.5 times as high as in Bulgaria (see Table 2 in the annex).
In 2017, the highest level of gross household adjusted disposable income per capita was recorded in Luxembourg (47.3 % above the EU-28 average having taken account of price level differences), while Germany (28.3 %) and Austria (20.5 %) were the only other EU Member States (no information available for Croatia or Malta) to report a level of gross household adjusted disposable income per capita that was more than one fifth above the EU-28 average; this was also the case for Switzerland (2016 data) and Norway.
By contrast, there were 11 EU Member States where the average level of gross household adjusted disposable income per capita was more than 20 % below the EU-28 average. Among these Member States, the lowest levels of gross household adjusted disposable income per capita in 2017 were recorded in Bulgaria (49.0 % of the EU-28 average), Romania (57.6 %; 2016 data), Latvia (63.3 %), Hungary (64.9 %) and Greece (66.6 %).
The share of net wages in the EU-28’s gross household adjusted disposable income grew to 36.1 % in 2017, the highest share during the period from 2007 to 2017
Figure 3 provides an analysis over time as to the different contributions that were made by the various components that together make-up gross household adjusted disposable income. In the EU-28, net wages (which consist of wages and salaries received by employees before tax, excluding social contributions paid by employers and employees) consistently accounted for the highest share of gross household adjusted disposable income between 2007 and 2017; their share was just over one third (within the range of 34.5 % -36.1 %). The relative share of net wages in gross household adjusted disposable income was at its lowest level, as may be expected, during the financial and economic crisis in 2009 and 2010, but had returned by 2015 to a share that was higher than that recorded pre-crisis, its share continued to increase in 2016 and 2017.
Mixed income of households relates to the profits of unincorporated enterprises and represents remuneration for work that is carried out by self-employed persons or members of their family; gross operating surplus accrues from renting or owning a dwelling. As with net wages, the contribution from these components to EU-28 gross household adjusted disposable income fell during the crisis to reach a relative low of 19.7 % in 2009 and 2010, with little change thereafter.
The second largest contribution to gross household adjusted disposable income was from social benefits (other than social transfers in kind). These include: payments from social security funds (such as pensions or child support); social assistance from government or non-profit institutions serving households; privately-funded social benefits such as those made by insurance companies. The share of social benefits in EU-28 gross household adjusted disposable income rose from 22.1 % in 2007 (just prior to the crisis) to 24.1 % by 2010. After remaining relatively stable in 2011 their share rose again in the next two years to reach a relative high of 24.7 % in 2013. Thereafter the contribution of social benefits to EU-28 gross household adjusted disposable income fell back modestly and was 24.4 % in 2017.
As for social benefits, the relative importance of social transfers in kind rose during the crisis, from 16.2 % of EU-28 gross household adjusted disposable income in 2007 to 17.2 % by 2010. The contribution from social transfers in kind changed little during the next few years, fluctuating between 17.0 % and 17.3 % (the latest share for 2017). The continuation of this relatively high share of redistribution in kind suggests that, despite some signs of an economic recovery, there were still a considerable number of people in the EU-28 affected by, among others, the fallout of the crisis, precarious employment or stagnating wage growth.
Unlike the other components which add to gross household adjusted disposable income, the level of income is reduced by taxes paid; for this reason taxes are shown as negative values in Figures 3 and 4. The negative share of EU-28 gross household adjusted disposable income that was accounted for by taxes fell during the crisis, reaching a relative low of -13.1 % in 2009 and 2010, before growing for five consecutive years to -14.4 % by 2015; there was no change in this share during 2016, but this was followed by another expansion in 2017, as a relative high of -14.6 % was recorded. There are a number of reasons why this reduction during the crisis may have occurred, including: lower levels of income leading to a lower overall tax take; the progressive nature of some taxes may reinforce this pattern; fewer people tend to be in work and or working extra (supplementary/overtime) hours during periods associated with an economic downturn (thereby reducing their marginal tax rate).
Social benefits and social transfers in kind accounted for a higher share of gross household adjusted disposable income in the EU than in either Japan or the United States
A similar analysis is presented in Figure 4 which details the contributions of the various components to gross household adjusted disposable income in the EU Member States and several non-member countries. In 2016, it is interesting to note that net wages accounted for a much higher share of gross household disposable income in Japan (48.4 %) and the United States (43.6 %) when compared with the aggregated data for the whole of the EU-28. Social benefits and social transfers in kind accounted for a higher share (41.7 %) of EU-28 gross household adjusted disposable income in 2017 when compared with Japan (36.0 %; 2016 data) or, in particular, the United States (24.9 %; 2016 data).
Looking in more detail at the individual EU Member States, there were considerable variations in terms of the contributions made by each component to gross household adjusted disposable income. In 2017, net wages and gross operating surplus and mixed income together accounted for 74.5 % of disposable income in Romania, a share that fell to less than half in the Netherlands (49.1 %) and Germany (47.3 %). Net wages were valued 7.2 times as high as the gross operating surplus and mixed income in Sweden and at least 5.0 times as high in Estonia and Denmark. By contrast, in Slovakia, Italy, Poland and most notably in Greece, the value of the gross operating surplus and mixed income was greater than the value of net wages; this situation was also observed in Turkey, where net wages are relatively low compared with gross operating surplus and mixed income, this may reflect a relatively high level of self-employment.
With the exception of Bulgaria, Romania and the three Baltic Member States — all of which had relatively low shares — the relative weight of social benefits in gross household adjusted disposable income was within quite a narrow range across the remaining EU Member States in 2017, from a low of 19.1 % in Hungary to a high of 28.4 % in Denmark. Social transfers in kind accounted for 10.6 % of gross household adjusted disposable income in Cyprus and relatively low shares in most of the other eastern and southern Member States, rising to more than 20.0 % of gross household adjusted disposable income in Luxembourg, Finland, Belgium and the Netherlands and more than 25.0 % in Denmark and Sweden.
Figure 5 shows the contribution from a number of different components to the overall change in gross household adjusted disposable income between 2007 and 2017; note these changes are based on information in current prices. On this basis, EU-28 gross household adjusted disposable income rose overall by 17.6 % during the most recent decade for which data are available, with the largest contributions being made by net wages (up 7.3 %, equivalent to more than two fifths of the overall change) social benefits (up 6.6 %, more than one third of the overall change) and social transfers in kind (up 4.1 %, just less than one quarter of the overall change).
In the vast majority of the EU Member States that recorded the highest growth rates for the development of their gross household adjusted disposable income, the main contributing factor was an increase in net wages. By contrast, among those Member States that had relatively low levels of growth for their gross household adjusted disposable income, it was common to find that an increase in social benefits accounted for a larger share of the overall gain, for example, in Spain, Cyprus, Portugal, the United Kingdom and Italy. Greece was the only country (for which data are shown in Figure 5) to report a fall in its gross household adjusted disposable income during the period under consideration.
Household saving rate
During periods of economic uncertainty it is likely that the household saving rate will increase, as households tend to save more when the risk of losing a job rises and they may defer expenditure on some or many non-essential goods and services (for example, the purchase of a new motor vehicle or a family holiday) until the economic situation improves. The household saving rate is defined as gross household saving divided by gross disposable income, with the latter being adjusted for changes in net equity of households in pension fund reserves.
Households in the EU saved approximately one tenth of their disposable income
Figure 6 reveals that the EU-28 household saving rate was 9.6 % in 2017, while the rate for the euro area was 2.2 percentage points higher, at 11.8 %. On average, households in the EU-28 saved a larger proportion of their gross household disposable income than their counterparts in Japan (9.0 %; 2016 data), but less than their counterparts in the United States (10.5%; 2016 data); note, however, that the data for Japan and the United States are not adjusted for changes in the net equity of households in pension funds.
In 2017, the highest gross saving rate among the EU Member States (no data available for Greece, Croatia, Malta and Romania) was recorded in Luxembourg (22.0 %), followed by Sweden (17.6 %) and Germany (17.3 %). There were 12 Member States which recorded saving rates below 10.0 %, among which Lithuania (-1.5 %) and Cyprus (-3.1 %) had negative rates; this suggests that households in these two economies with negative rates were spending more than their gross household disposable income (in other words, they were either using their accumulated savings from previous periods or alternatively they were borrowing to finance their expenditure).
Developments for household saving rates during the period 2007 to 2017 are presented in Figure 7. These show that the EU-28 saving rate increased by 2.1 percentage points between 2007 and 2009 to reach a relative high of 12.9 % as the full impact of the global financial and economic crisis was felt. Subsequently, the EU-28 saving rate fell, initially at a relatively fast pace and more recently at a more modest rate; in 2016 it fell below its pre-crisis level and was then reduced by 1.0 points to stand at 9.6 % by 2017.
Japanese household saving rates have traditionally been lower than the rate recorded in the EU-28. This was the case throughout the period studied in Figure 7, whereas there was a mixed picture for the United States, with higher rates (than in the EU-28) in 2011 and 2012 and again in 2014 and 2015. In 2016, the household saving rate for the United States was marginally lower than the rate for the EU-28.
Figure 7 also shows developments for the saving rates of the four largest EU Member States. The household saving rate in Germany remained quite stable during the period under consideration, within the range of 16.3 %-17.3 %, its highest rates being recorded in 2017. By contrast, the household saving rates in France and the United Kingdom rose during the crisis, peaking in 2009 or 2010, before falling most years — there was a particularly rapid reduction in the saving rate in the United Kingdom during 2016 and 2017, with the rate falling to 4.5 % (less than half the rate recorded at the height of the crisis). A different pattern was observed in Italy, as its household saving rate fell throughout the crisis and reached a relative low of 9.5 % in 2012, before increasing modestly for a couple of years and then stabilising or falling marginally; as a result, the Italian saving rate was 4.3 percentage points lower in 2017 than it had been in 2007.
The final analysis in this section divides the latest 10-year period into two halves to analyse changes in household saving. The EU-28 household saving rate increased by 0.3 percentage points between 2007 and 2012, to then fall by 1.5 points during the period between 2012 and 2017 (see Figure 8). A modest reduction was observed during both of these periods for the euro area’s household saving rate.
Combining the information for both periods, the household saving rate in Bulgaria rose overall by 24.7 points during the 10-year period under consideration, while there was also a considerable increase for the saving rate in Estonia (up 11.8 points); the next highest increase was recorded in Denmark (up 6.8 points). There were 12 EU Member States where the household saving rate increased between 2007 and 2017, with the same number of Member States recording a fall; no data available or incomplete information for Greece, Croatia, Malta and Romania. By far the largest reduction was in Cyprus, where the household saving rate fell by 9.3 points during the period under consideration.
Household investment rate
Household investment mainly consists of the purchase and renovation of dwellings; consumer durables (such as passenger cars) are not considered part of this component nor are financial investments and are included in final consumption; note also that the investment statistics that are presented in this section also include investments made by unincorporated enterprises (principally sole proprietors). The household investment rate is defined as gross fixed capital formation (mainly dwellings) divided by gross disposable income, with the latter being adjusted for changes in net equity of households in pension fund reserves. Among other uses, this indicator provides a mean of analysing the crash experienced in housing markets — linked to the subprime mortgage and credit crisis — during the global financial and economic recession.
Household investment rates were at least 10.0 % in Luxembourg, Belgium, Cyprus, the Netherlands and Finland in 2017
Across the EU-28, households invested 8.2 % of their gross household disposable income in 2017; this figure was slightly lower than the rate recorded in the United States (8.0 %; 2016 data), but much higher than the rate in Japan (5.9 %; 2016 data); note that no adjustment has been made for changes in household pension fund reserves for either Japan or the United States (see figure 9).
Household investment rates in the EU Member States ranged from a high of 11.3 % in Finland, and double-digit rates in the Netherlands (11.0 %), Cyprus (10.2 %), Belgium (10.1 %) and Luxembourg (10.0 %) down to 5.0 % or less in Bulgaria and Latvia.
Figure 10 shows the development of investment rates during the most recent 10-year period for which data are available. In the EU-28, the impact of the global financial and economic crisis was apparent, with the household investment rate falling at a fairly rapid pace from its pre-crisis high in 2007. While the EU-28 household investment rate continued to fall — albeit at a more modest pace — through to 2015, there was a modest upturn in 2016 and 2017. The pattern of development in the United States was more pronounced, with an earlier start for the downturn and a deeper fall during the crisis; however, the household investment rate in the United States reached a relative low by 2011, after which it posted five successive annual increases (overtaking the rate in the EU-28 in 2015 and maintaining a higher rate in 2016). The household investment rate in Japan was consistently at a much lower level than in the EU-28 and also recorded a downward development prior to and during the crisis — reaching a relative low in 2010. Having shown some signs of recovery up until 2013, the household investment rate in Japan thereafter fluctuated within a narrow range (5.8-5.9 %) during the following three years.
A closer analysis of the results for individual EU Member States reveals that in some of them the crisis had a particularly strong impact. For example, with the bursting of the housing bubble in Ireland its household investment rate fell by 20.0 percentage points between 2007 and 2012. The household investment rate also fell by a large amount during this period in Cyprus (-11.7 points), Spain (-9.0 points) and Estonia (-8.9 points); note that there are no data available for Greece, Malta or Romania.
A comparison of changes for the household investment rate between the two periods covered in Figure 11 reveals that between 2012 and 2017 investment rates were either falling at a slower pace than had been the case between 2007 and 2012 or in fact rising. Germany and Bulgaria were the only EU Member States to record an increase for their households investment rate in both periods.
Source data for tables and graphs
The compilation of sector accounts follows the European system of accounts (ESA 2010). It provides the basis for all of the data for the EU Member States, EFTA and enlargement countries, as collected by the European Central Bank (ECB) and Eurostat. Together they publish integrated non-financial and financial accounts, including financial balance sheets, for the euro area; Eurostat also publishes the non-financial accounts of the EU.
Data for Japan and the United States come from the national accounts published by the Organisation for Economic Cooperation and Development (OECD) which are established according to the system of national accounts (SNA) concepts.
The non-financial accounts
Sector accounts by institutional sector provide a systematic description of the different stages of the economic process: production, generation and distribution, use and accumulation of income. Each of the accounts ends with a balancing item: value added, operating surplus, primary income, disposable income, saving, net lending/borrowing.
The household sector
Institutional sectors within national accounts bring together economic units with broadly similar characteristics and behaviour. The household sector — which for the purpose of this article also includes non-profit institutions serving households (NPISH) — is one of four sectors along with non-financial corporations, financial corporations and general government: together they make up the domestic economy.
The household sector consists of individuals or groups of individuals as consumers, as entrepreneurs (producing market goods, non-financial and financial services) and as producers of goods and non-financial services exclusively for their own final use. In general, sole proprietorships and most partnerships that do not have an independent legal status are considered to be part of the household sector, rather than as corporations (financial or non-financial). However, there are sometimes practical difficulties in delineating ‘quasi-corporations’ (unincorporated businesses with the characteristics of companies) between corporations on one hand and the household sector on the other, which may influence the scope and comparability of the data presented as well as the internal consistency of the full set of accounts.
Note that data for the household sector in this article are shown together with information on non-profit institutions serving households sector. The non-profit institutions serving households sector is relatively small: these institutions provide goods or services to households for free or at considerably reduced prices; examples include charities, relief and aid organisations, religious groups, consumer associations, sports and recreational clubs, professional societies, trade unions and political parties. Their main resources are derived from voluntary contributions in cash or in kind from households (in their capacity as consumers), payments made by general government, or property income.
Gross disposable income is the result of all current transactions before consumption. It excludes exceptional resources/uses such as capital transfers, holding gains/losses and the consequences of natural disasters and reflects the net resources, earned during the period, which are available for consumption and/or saving. The information presented in this article concerns household disposable income adjusted to take account of social transfers in kind. The aggregate therefore consists of: net wages, the gross operating surplus and mixed income, net property income (note that financial intermediation services indirectly measured (FISIM) is a component reallocated from property income to consumption within national accounts), social benefits, social transfers in kind and other transfers, reduced by any taxes paid and pension contributions. In other words, it is the total amount of resources that a household has left available to spend or save once income taxes and pension contributions have been subtracted. Note that the statistics presented for gross disposable income in Japan and the United States are not adjusted for changes in net equity of households in pension fund reserves and that this difference is therefore carried over into derived indicators such as the gross household saving rate and gross household investment rate.
The gross household saving rate is the ratio of gross saving to gross disposable income, the latter adjusted for the change in net equity of households in pension fund reserves to offset their impact on cross-country comparisons.
The gross household investment rate is the ratio of gross investment (gross fixed capital formation) to gross disposable income, the latter adjusted for the change in net equity of households in pension fund reserves.
In most developed world economies, people have come to expect that every generation will enjoy better living standards than those before. However, since the turn of the millennium this development has become less clear-cut, as rising housing costs (for rent or for purchase) have taken an increasing share of disposable income; this has had a particular impact on younger generations, many of whom cannot afford to leave the family home when they move into the labour market. These problems were compounded by the global financial and economic crisis that led, among others, to a slowdown in economic activity, sluggish real wage growth, higher levels of unemployment and more precarious employment conditions.
Gross household adjusted disposable income provides a measure of the financial resources that are available to households, after taxes and other deductions have been made. This information is used as a building block within national accounts to develop a range of derived indicators to look in more detail at issues such as discretionary income, gross household saving rates and gross household investment rates.
- Adjusted gross disposable income of households per capita in PPS (tec00113)
- Household saving rate (tec00131)
- Household investment rate (tec00098)
- Key indicators (nasa_10_ki)
- Non-financial transactions (nasa_10_nf_tr)