Latest developments in income dynamics and poverty

Data extracted in June 2024

Planned article update: June 2025

Highlights

At the EU level, the at-risk-of-poverty rate slightly decreased to 16.2 % according to EU-SILC 2023 (2022 income)

Flash estimates for 2023 income show that the at risk of poverty rate is expected to continue to slightly decrease (16.0 %)

This article provides the latest developments in terms of income dynamics and poverty. All figures provided are based on structural and detailed indicators from European Union Statistics on Income and Living Conditions (EU-SILC), complemented with flash estimates (FE).

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Key findings

According to the EU-SILC 2023 results, the at risk of poverty rate (AROP) decreased, at the EU level, from 16.5 % (based on 2021 income) to 16.2 % (2022 income). The same rate is estimated to slightly decrease by 0.2 percentage points (pp) in 2023.
Median equivalised disposable income at the EU level income, according to the EU-SILC 2023 results, increased by 6.7 % from 2021 to 2022. For the 2023 income, flash estimates nowcast an overall increase of 6.0 %, with positive changes estimated for all countries.
The EU-SILC 2023 data show that real income, at the EU level, in 2022 decreased by 1.9 % compared to the previous year. Flash estimates, however, show, for 2023, a slight, non-statistically significant increase (0.2 %). The nowcasted real income is estimated to increase in 15 countries, to remain stable in 7 countries, while 5 countries are expected to experience a negative evolution.

At risk of poverty rate

According to the EU-SILC 2023, 71.9 million people in the EU (16.2 % of the population) were at risk of poverty (AROP). The figure slightly decreased compared with EU-SILC 2022 (72.7 million, 16.5 % of the population). As EU-SILC information on income is referenced on the previous year, Eurostat produces flash estimates (FE) of 2023 income to predict the evolution of AROP for the upcoming EU-SILC 2024. Such flash estimates show a very slight, non-statistically significant decrease also in AROP based on 2023 income at EU level.

Figure 1: Change in at-risk-of-poverty rate, EU, 2019-2023
Source: Eurostat ilc_li02, Eurostat flash estimates

Table 1 shows the at-risk-of-poverty rate in EU-SILC 2023 (2022 income), complemented by the flash estimates on the AROP rate based on 2023 income (nowcasting EU-SILC 2024). According to the 2023 EU-SILC results, Latvia, Estonia (both 22.5 %) and Romania (21.1 %) had the highest at-risk-of-poverty rates. On the other side, Ireland, Denmark, and Czechia reported the lowest shares (12.0 %, 11.8 % and 9.8 %, respectively). Flash estimates are represented by arrows indicating the estimated direction and magnitude of change. According to the flash estimates, AROP is expected to remain stable in most countries (17), decrease in 6 (Germany, Estonia, Spain, the Netherlands, Portugal and Finland), and increase in 4 (Greece, France, Luxembourg, and Austria). It should be noted that these indicators are based on nominal values of disposable income and therefore do not incorporate changes in the cost of living and purchasing power.

Table 1: At risk of poverty rate by country, 2022-2023 income
Source: Eurostat ilc_li02, Eurostat flash estimates

EU median equivalised disposable income in real terms nowcasted to remain stable in 2023

In Figure 2, the EU-SILC 2023 data shows that nominal income, at the EU level, in 2022 increased by 6.7 %, but decreased in real terms by 1.9 %. Similarly, according to the flash estimates the EU 2023 income is expected to continue to increase by about 6.0 % in nominal terms, while real income is expected to remain stable (0.2 %). At the EU level, 2023 still saw rising prices for food and non-alcoholic beverages (12.6 %), while prices for electricity, gas, and other fuels show a moderate annual average rate of change (1.4 %) following the significant increases in 2022 (42.4 %).

Figure 2: Change in median equivalised disposable income, nominal vs real terms, EU, 2019-2023
Source: Eurostat ilc_di01,ilc_di18, ert_bil_eur_a, Eurostat flash estimates

Table 2 displays the results, at the national level, of median income in nominal terms from the last two EU-SILC operation years, along with the flash estimates for the income year 2023. Between 2022 and 2023 EU-SILC exercises (based on 2021 and 2022 income, respectively), the median income increased in all the EU countries. In particular, the highest increases were reported in Bulgaria, Romania, and Austria (by 21.3 %, 19.1 % and 12.9 %, respectively). On the other side, in Sweden, Ireland, Estonia and Denmark the variation was around 2.0 %. The evolution of income in real terms, for the same EU-SILC years, differed significantly across countries: seven countries reported positive changes with the highest ones recorded in Bulgaria, Romania, and Austria (7.3 %, 6.6 % and 4.4 %, respectively). Among the remaining 20 countries, where real income in 2022 (2023 EU-SILC exercise) was lower than in 2021 (2022 EU-SILC exercise), Slovakia (-6.8 %), Lithuania (-6.9 %) and Estonia (-14.6 %) experienced the sharpest decreases.

Flash estimates in nominal terms also show positive changes for all countries. However, when analysing the results in real terms, the nowcasted median disposable income is estimated to increase in 15 countries. It is estimated to remain stable in 7 countries (Denmark, Croatia, Cyprus, Latvia, Malta, Austria and Sweden) and 5 countries (Czechia, Germany, France, Italy, and Hungary) are expected to experience a negative evolution. This diversity reflects the heterogeneous impact of inflation across countries.

Table 2: Median equivalised disposable income by country, nominal vs real terms
Source: Eurostat ilc_di01,ilc_di18, ert_bil_eur_a, Eurostat flash estimates

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Data sources

The EU-SILC indicators provide insights on the economic wellbeing and other living conditions on EU residents based on data collected during a specific year, denoted as N. This data encompasses both the characteristics of households for that year (N) and the income from the preceding year, N-1. The income for year N-1 is an estimate for income of year N within EU-SILC. To take into account differences in household size and composition and thus enable comparisons of income levels, the concept of equivalised disposable income is used. It is based on the total net (also referred to as disposable) household income divided by the number of 'equivalent adults', using a standard (equivalence) scale.

Eurostat flash estimates complement structural and detailed indicators from EU-SILC to capture the latest income changes, particularly relevant in times of crisis. Flash estimates are based on modelling and microsimulation techniques ^[1] that consider the complex interaction between labour market developments, economic and monetary policies, and the implementation of social reforms. For the latter, Eurostat uses the latest information on labour from the 2023 Employment and unemployment Labour Force Survey together with the EUROMOD ^[2]microsimulation model, which provides the effects of direct taxes, social security contributions and benefits on households’ income.

At-risk-of-poverty rate, abbreviated as AROP, corresponds to the share of people with an equivalised disposable income (after social transfer) below the at-risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income after social transfers.

Income in real terms reflects the level of the equivalised disposable income, taking changes in prices into account. The price deflator used is the Harmonised Index of Consumer Prices (HICP), which is an index for measuring the change in prices of consumer goods and services acquired by households in monetary transactions. In this article, the presented real income levels are indexed on year 2019. More information on inflation can be found at the following link: Consumer prices - inflation.

Context

Indicators on poverty and income inequality are based on EU statistics on income and living conditions (EU-SILC). The AROP rate is part of the at risk of poverty or social exclusion rate defined in the framework of the EU 2030 target on poverty and social exclusion (AROPE).

Providing timelier social statistics – especially indicators on income poverty and inequality – is a priority for the Commission and the European Statistical System. In order to better monitor the effectiveness of social policies at EU level, Flash Estimates (FE) offer early indicative results for income year N, until EU-SILC data become available. These estimates, that are part of the experimental statistics produced by Eurostat, have a release date appreciably earlier than the survey data: i.e., FE of income year 2023 published in June 2024 complementing EU-SILC 2023 data that refers to income year 2022.

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Publications

Key figures on European living conditions – 2023 edition

Methodology

Legislation

Regulation (EC) No 2019/1700 — the central piece of legislation for social surveys including EU-SILC
Regulation (EC) No 2019/2242 — additional central piece of legislation for EU-SILC

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Regional Statistics Illustrated

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Notes

↑ The flash estimates for Romania are based on current income information collected through the Household Budget Survey (HBS – Romania) and for Sweden on the national microsimulation model.
↑ EUROMOD is a tax-benefit microsimulation model for the EU and UK that enables researchers and policy analysts to calculate the effects of taxes and benefits on household incomes and work incentives. Initially developed by the Institute for Social and Economic Research (ISER) at the University of Essex, it is now maintained, developed, and managed by the Joint Research Centre (JRC) of the European Commission, in collaboration with Eurostat and national authorities from the EU countries

[1] The flash estimates for Romania are based on current income information collected through the Household Budget Survey (HBS – Romania) and for Sweden on the national microsimulation model.

[2] EUROMOD is a tax-benefit microsimulation model for the EU and UK that enables researchers and policy analysts to calculate the effects of taxes and benefits on household incomes and work incentives. Initially developed by the Institute for Social and Economic Research (ISER) at the University of Essex, it is now maintained, developed, and managed by the Joint Research Centre (JRC) of the European Commission, in collaboration with Eurostat and national authorities from the EU countries

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