Nearly 1 million NL residents will live below poverty line next year: Planning Office
The number of households living below the poverty line will increase from about 815,000 this year to around 995,000 in 2024, the Central Planning Office (CPB) said in its spring forecast. The increase is due to many temporary support measures disappearing. Childhood poverty will rise from 6.1 percent this year to 7.1 percent next year without intervention.
Poverty will rise sharply next year because the measures the government took to protect purchasing power after Russia’s invasion of Ukraine caused inflation to spike are temporary. This includes the energy allowance provided through municipalities, the temporary increase in the healthcare allowance, and the price cap on energy. Once these measures disappear, many more people risk falling below the poverty line.
The CPB describes the poverty line as the not-much-but-sufficient limit. People living on that line can afford groceries, sports membership, and a short holiday. The limit for a single-person household is 1,508 euros in 2023 and 1,573 euros in 2024. The income limit is higher for families.
The planning office expects that the government won’t achieve its goal of halving child poverty between 2015 and 2025. However, the group of children living in poverty will likely decrease slightly after next year, the CPB thinks.
The CPB expects the Dutch economy to grow by 1.6 percent this year and 1.4 percent next year. Households’ purchasing power will decrease by an average of 0.2 percent this year and rise by 2 percent next year.
“We are seeing a recovery of purchasing power now that inflation is falling and wage growth is picking up. But due to the loss of temporary government support, the number of people below the poverty line will rise again next year. We will also see the government deficit continue to rise in the coming years. That calls for more targeted support than is currently the case,” said CPB director Pieter Hasekamp, according to RTL Nieuws.
The sharp fall in energy prices will keep purchasing power relatively stable this year. Wages are also starting to rise somewhat, counteracting part of the inflation.