Households - statistics on disposable income, saving and investment
Data extracted in July 2020.
Planned update: July 2021.
Wages accounted for 36.4 % of the EU-27’s household disposable income in 2018, and social benefits for 24.8 %.
In 2018, the household saving rate was 11.4 % in the EU-27 and 12.4 % in the euro area.
The EU-27’s household investment rate was 8.6 % in 2018, with double-digit rates recorded in Finland, the Netherlands, Luxembourg and Cyprus.
Gross household saving rate, 2008-2018
This article focuses on disposable income, saving and investment for households in the European Union (EU) and the euro area; note that there are complementary articles that provide information for financial assets and liabilities for households, for financial assets and liabilities of non-financial corporations and the distribution of profits and investment for non-financial corporations.
This article 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-27 and the euro area, as well as for individual EU Member States, the United Kingdom, 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 of issues 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 that 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-27’s gross household adjusted disposable income was valued at EUR 9 781 billion in 2018, which was equivalent to approximately three quarters (72.5 %) of the value of gross domestic product (GDP). Germany accounted for the highest share of the EU-27’s gross household adjusted disposable income, 25.6 % of the total, followed by France (18.7 %) and Italy (14.0 %).
Figure 1 shows information for gross household adjusted disposable income per capita during the period 2008 to 2018; 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 over several years: increases in the standard of living enjoyed by many people living in the EU-27 and the euro area turned negative during the years from 2010 to 2013. After 2013, there was an upturn in economic fortunes in both the EU-27 and the euro area, with gross household adjusted disposable income per capita increasing in both nominal and real terms.
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, an adjustment 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-27 average, with the ratio for the EU-27 average set to equal 100. Figure 2 shows that in 2018, 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 (2017 data). Note however that a similar comparison for 2008 — just 10 years earlier — reveals that gross household adjusted disposable income per capita in Luxembourg had been 4.1 times as high as in Bulgaria (see Table 2 in the annex).
In 2018, the highest level of gross household adjusted disposable income per capita was recorded in Luxembourg (47.6 % above the EU-27 average having taken account of price level differences), while Germany (29.6 %) and Austria (21.2 %) were the only other EU Member States (no information available for Malta) to report a level of gross household adjusted disposable income per capita that was more than one fifth above the EU-27 average; this was also the case for Switzerland and Norway (2017 data).
By contrast, there were nine EU Member States where the average level of gross household adjusted disposable income per capita was more than 20 % below the EU-27 average. Among these Member States, the lowest levels of gross household adjusted disposable income per capita in 2018 were recorded in Greece (68.1 % of the EU-27 average), Romania (also 68.1 %), Latvia (67.0 %), Hungary (66.5 %), Croatia (63.8 %) and Bulgaria (49.6 %; 2017 data).
The share of net wages in the EU-27’s gross household adjusted disposable income grew to 36.4 % in 2018, the highest share during the period from 2008 to 2018
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-27, 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 2008 and 2018; their share was just over one third (within the range of 33.9 % to 36.4 %). 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 2014 to the same share that it had been in 2008; the share continued to increase each year thereafter.
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-27 gross household adjusted disposable income fell during the crisis to reach a relative low of 20.2 % in 2009, having been 21.5 % in 2008. This share increased in 2010 and 2011 to reach 20.6 %, before stabilising in a range of 20.2 % to 20.5 % for several years. In 2018, the share dipped to 20.1 %, the lowest share throughout the period studied.
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-27 gross household adjusted disposable income rose from 22.7 % in 2008 (at the beginning of the crisis) to 24.4 % by 2010. After remaining relatively stable in 2011, this share rose again in the next few years to reach a high of 25.3 % in 2015. Thereafter the contribution of social benefits to EU-27 gross household adjusted disposable income fell back modestly and was 24.8 % in 2018.
As with social benefits, the relative significance of social transfers in kind rose during the crisis, from 16.7 % of EU-27 gross household adjusted disposable income in 2008 to 17.5 % by 2010. The contribution from social transfers in kind was slightly lower (17.3 %) in 2011 and 2012, before increasing over several years to reach a new peak of 17.8 % in 2016 and 2017. In 2018, this upward trend was broken, as the share fell back slightly, to 17.7 %. 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-27 affected by, among other issues, the fallout of the crisis, precarious employment or stagnating wages.
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-27 gross household adjusted disposable income that was accounted for by taxes fell during the crisis, reaching a relative low of -13.0 % in 2010, before growing for five consecutive years to -14.7 % by 2015; this share fell back slightly (to -14.6 %) during 2016, but this was followed by further expansions in the next two years, as a relative high of -14.9 % was recorded in 2018. 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 2017, it is interesting to note that net wages accounted for a much higher share of gross household disposable income in the United States (43.1 %) when compared with the aggregated data for the whole of the EU-27 in 2018 (36.4 %). Social benefits and social transfers in kind accounted for a higher share (42.6 %) of EU-27 gross household adjusted disposable income in 2018 when compared with the United States (24.6 %; 2017 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 2018, net wages and gross operating surplus and mixed income together accounted for 72.3 % of disposable income in Ireland, while this share was less than half of the total in the Netherlands (49.7 %) and Germany (49.0 %). Net wages were valued 7.4 times as high as the gross operating surplus and mixed income in Sweden, 5.5 times as high in Estonia and 5.4 times as high in Denmark. By contrast, in 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.
With the exception of Romania, the three Baltic Member States, Bulgaria (2017 data) and Hungary — all of which had lower shares — the relative weight of social benefits in gross household adjusted disposable income was within a narrow range across the remaining EU Member States in 2018, from a low of 19.3 % in Croatia to a high of 28.3 % in Denmark. Social transfers in kind accounted for 10.0 % of gross household adjusted disposable income in Cyprus and relatively low shares in most of the other eastern and southern Member States, while they reached more than 20.0 % of gross household adjusted disposable income in Belgium, Finland and Luxembourg and 25.0 % or more in the Netherlands, 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 2008 and 2018; note these changes are based on information in current prices. On this basis, EU-27 gross household adjusted disposable income rose overall by 18.7 % during the most recent decade for which data are available. The largest contributions were made by net wages (contributing 8.4 percentage points of the overall change), social benefits (6.8 percentage points of the overall change) and social transfers in kind (4.3 percentage points of the overall change); taxes made the largest negative contribution (-4.1 percentage points of the overall change).
In a majority of EU Member States, the main contributing factor to the development of their gross household adjusted disposable income was net wages. Among most of the others, including three with relatively low levels of growth for their gross household adjusted disposable income (Italy, Spain and Portugal) and two with relatively high overall growth (the Netherlands and Finland), it was common to find that the increase in social benefits accounted for the largest share of the overall gain. Greece and Cyprus were the only exceptions (for which data are shown in Figure 5), as the largest contribution to their overall change was for gross operating surplus and mixed income. Greece was also an exception in that it was the only Member State to record an overall fall in its gross household adjusted disposable income during the period under consideration.
Household saving rate
During periods of economic uncertainty, household saving rates may be expected to 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-27 saved more than one tenth of their disposable income
Figure 6 reveals that the EU-27 household saving rate was 11.4 % in 2018, while the rate for the euro area was higher, at 12.4 %. On average, households in the EU-27 saved a larger proportion of their gross household disposable income than their counterparts in Japan (9.1 %; 2017 data), but less than their counterparts in the United States (12.3%; 2017 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 2018, the highest gross saving rate among the EU Member States (no data available for Bulgaria, Greece, Malta and Romania) was recorded in Luxembourg (21.4 %), followed by Germany (18.5 %) and Sweden (17.9 %). There were nine Member States which recorded saving rates below 10.0 %, among which Lithuania (-1.2 %) had a negative rate. Negative rates indicate that households 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 2008 to 2018 are presented in Figure 7. These show that the EU-27 saving rate increased by 1.6 percentage points between 2008 and 2009 to reach a relative high of 13.7 % as the impact of the global financial and economic crisis was felt. Subsequently, the EU-27 saving rate fell, initially at a relatively fast pace and more recently at a more modest rate; in 2012 it fell below its 2008 level and by 2015 had reached 11.2 %. The development of this share during the next three years was irregular, ranging between 11.2 % and 11.5 %.
Japanese and British household saving rates have traditionally been lower than the rates recorded in the EU-27. This was the case throughout the period studied in Figure 7. In 2017, the rate for the EU-27 was 2.1 percentage points higher than that for Japan, while in 2018 the rate for the EU-27 was 5.4 percentage points higher than that in the United Kingdom. By contrast, there was a mixed picture for the United States, with lower rates (than in the EU-27) between 2008 and 2010 and similar or higher rates thereafter. In 2017, the household saving rate for the United States was 1.0 percentage points higher than the rate for the EU-27.
Figure 7 also shows developments for the saving rates of the three largest EU Member States. The household saving rate in Germany remained within the range of 16.7 % to 18.5 % during the period under consideration. Its highest rates were recorded in the most recent years, reflecting an initial decline in rates between 2008 and 2012 and a subsequent rise. The household saving rate in France rose during the crisis, peaking in 2009 at 15.8 %, before falling most years to a low of 13.6 % in 2016 and 2017; in 2018 the rate increased to 13.9 %. Throughout this period, the rate in France was above the EU-27 average. A different pattern was observed in Italy, as its household saving rate fell relatively rapidly throughout the crisis and reached a relative low of 9.3 % in 2012, having been at 13.7 % (and therefore above the EU-27 average) in 2008. In 2013, the rate in Italy increased strongly and this was followed by a more modest increase in 2014, reaching 11.3 %. Thereafter, the household saving rate fell most years, reaching 10.1 % in 2018, 1.4 percentage points below the EU-27 average and 3.7 percentage points lower than the Italian rate had been 10 years earlier.
The final analysis in this section divides the latest 10-year period into two halves to analyse changes in household saving. The EU-27 household saving rate decreased by 0.2 percentage points between 2008 and 2013, to then fall by a further 0.5 percentage points during the period between 2013 and 2018 (see Figure 8). A reduction of 0.5 percentage points was observed during the first of these periods for the euro area’s household saving rate, followed by almost no change (up 0.1 percentage points) between 2013 and 2018.
Combining the information for both periods, the household saving rate in Denmark rose overall by 7.9 percentage points during the 10-year period under consideration. The next highest increases were recorded in Croatia (up 6.0 percentage points) and Sweden (up 5.0 percentage points). There were 11 EU Member States where the household saving rate increased between 2008 and 2018, with 12 recording a fall; no data available or incomplete information for Bulgaria, Greece, Malta and Romania. The largest decreases were in Belgium, Latvia, Austria and Italy, where the household saving rates fell by 6.3, 5.2, 4.1 and 3.7 percentage points respectively during the period under consideration.
Household investment rate
Household investment mainly consists of the purchase and renovation of dwellings; expenditure on consumer durables (such as passenger cars) is not considered part of this component (and is included in final consumption) nor are financial investments. 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 means of analysing the crash experienced in housing markets — linked to the subprime mortgage and credit crisis — during the global financial and economic crisis.
Household investment rates were at least 10.0 % in Cyprus, Luxembourg, the Netherlands and Finland in 2018
Across the EU-27, households invested 8.6 % of their gross household disposable income in 2018; this figure was slightly higher than the rate recorded in the United States (8.2 %; 2017 data), which in turn was higher than the rate in Japan (6.0 %; 2017 data) — see Figure 9. Note that no adjustment has been made for changes in household pension fund reserves for either Japan or the United States.
Household investment rates in the EU Member States ranged from a high of 12.6 % in Finland, and double-digit rates in the Netherlands (12.1 %), Luxembourg (11.5 %) and Cyprus (10.7 %) down to 5.0 % or less in Latvia and Croatia.
Figure 10 shows the development of investment rates during the most recent 10-year period for which data are available. In the EU-27, the impact of the global financial and economic crisis was apparent, with the household investment rate falling at a fairly rapid pace from its 2008 level. While the EU-27 household investment rate continued to fall — albeit at a more modest pace — through to 2015, there was a modest upturn in 2016, 2017 and 2018. The pattern of development in the United States was more pronounced, with the downturn in the household investment rate reaching a relative low by 2011, after which it posted six successive annual increases, but remaining below the rate in the EU-27 in all years studied. The household investment rates in Japan and the United Kingdom were consistently at much lower levels than in the EU-27 and also recorded a downward development during the crisis, reaching a relative low in 2010 in Japan and between 2009 and 2012 in the United Kingdom. In Japan, the household investment rate showed some signs of recovery up until 2013, after which it fluctuated within a narrow range (5.7 % to 6.0 %); in 2017 the rate in Japan was 6.0 %, 2.5 percentage points lower than that observed in the EU-27. In the United Kingdom, the rate increased steadily after 2012 to reach a similar level to that observed for Japan: by 2018, the rate in the United Kingdom was 2.7 percentage points lower than in the EU-27.
A closer analysis of the results for individual EU Member States reveals that in some of them the crisis had a particularly strong impact on the household investment rate. For example, with the bursting of the housing bubble in Ireland its household investment rate fell by 12.4 percentage points between 2008 and 2013; in Cyprus the rate fell by the same amount during the same period, reflecting not only the global crisis but also the sovereign debt crisis. The household investment rate also fell by a large amount during this period in Spain (down 9.1 percentage points). Note that there are no data available for Bulgaria, Greece or Malta.
A comparison of changes for the household investment rate between the two periods covered in Figure 11 reveals that — with only a few exceptions among the EU Member States — between 2013 and 2018 investment rates were either rising or falling at a slower pace than had been the case between 2008 and 2013. Slovakia and Germany were the only EU Member States to record a smaller increase between 2013 and 2018 (in fact almost no change in Slovakia) than between 2008 and 2013, while in Romania the fall in the rate was almost the same 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, the United Kingdom, 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.
As stated above, data for the household sector in this article are shown including information on non-profit institutions serving households sector. The non-profit institutions serving households sector is relatively small and includes, for example, charities, relief and aid organisations, religious groups, consumer associations, sports and recreational clubs, professional societies, trade unions and political parties. These institutions provide goods or services to households for free or at considerably reduced prices. 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, an expectation of rising living standards has become common. However, since the turn of the millennium a continuous increase in living standards has become less clear-cut in some countries for a number of reasons. Housing costs (for rent or for purchase) have taken an increasing share of disposable income, with a particular impact on younger generations, many of whom may find it increasing difficult to afford to leave the family home when they move into the labour market. Various crises have disturbed economic and social developments: among other impacts, these have often led 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)