In 2021, the purchasing power of the Caribbean Dutch population continued to rise, but less sharply than in the previous year. The population of Bonaire gained 1.1 percent relative to 2020; on St Eustatius this was 0.5 percent, while Saba residents gained 0.1 percent. The highest gains were seen among people living in households with underage children and among those in employment. CBS reports this based on newly released figures.
In a bid to improve the livelihood security in the Caribbean Netherlands, a number of structural steps have been taken since 2019 to raise minimum wages and benefits, lending a boost to local purchasing power. In 2021, the child benefit was raised. The COVID-19 emergency support measures to offset income losses for employees and self-employed were still in effect. Benefits and minimum wages were not adjusted for the deflation in 2020. In 2021, rising average price levels reduced the purchasing power on Bonaire and Saba. On St Eustatius, the average price level fell slightly, which had a favourable effect on purchasing power.
Improvement for people in work
On all three islands, the median purchasing power improved for people in households with a primary income from employment. At 1.7 percent, Bonaire saw the largest increase in purchasing power for this group. A median purchasing power development of 1.7 percent means a gain of at least 1.7 percent for one half of the population and less than 1.7 percent for the other half. Benefit recipients on Bonaire and Saba saw their purchasing power decline as benefits were not adjusted for inflation.
More buying power for households with children
On all three islands, the median purchasing power improved for people in households with children. On Bonaire, spending power increased most strongly among the single-parent families (+3.1 percent). Spending power on Saba rose most significantly for couples with children (+2.5 percent). On St Eustatius, people in households without children also benefited from a purchasing power gain.
Young people saw greatest improvement
On all three islands, people in households with a main earner up to the age of 40 saw the greatest purchasing power improvement. They gained 2.7 percent on Bonaire, 2.5 percent on St Eustatius and 2.4 percent on Saba. The majority of these main earners are employed and in the process of climbing the career ladder. Their incomes rise as they gain more work experience and obtain better-paying jobs.
Lowest incomes on St Eustatius gain
Of all four income quartiles on St Eustatius, the quartile with the lowest income (bottom quartile) gained the most purchasing power at 0.9 percent; two-thirds of the people in this quartile saw improvement, mainly due to deflation and an increased child benefit. On Bonaire, the greatest improvement in median purchasing power, 2.7 percent, was seen among the households in the top quartile (highest incomes).
Explanations:
Improvement of livelihood security
Every year, the statutory minimum wage as well as social relief ‘Onderstand’, the AOV (state pension) benefit and the AWW (widow and orphan) benefit are adjusted based on the consumer price index in the third quarter of the previous year. In the third quarter of 2020, the CPI change was -4.8 percent on Bonaire, -3.3 percent on St Eustatius and -1.6 percent on Saba. The negative price index was due to government subsidies on electricity, water and internet connections as of 1 May 2020. These resulted in a fixed usage tariff of 0 US dollars for electricity and water and a monthly 25 dollar discount for fixed internet connections. This means that there was deflation. As a result, the Ministry of Social Affairs and Employment (SZW) decided not to index minimum wages and benefits for 2021.
The child benefit was raised by 2.4 percent because of funds made available in the European Netherlands to increase the maximum child budget for families with three or more children. Since the Caribbean Netherlands does not have a child budget, it was decided to increase the child benefit instead. Including that increase, the child benefit is currently 85 US dollars per month per child on Bonaire, 87 US dollars on St Eustatius and 86 US dollars on Saba.
Purchasing power development
Purchasing power developments per person are calculated as year-on-year percentage changes in that person’s standardised disposable household income, adjusted for price changes. These percentage-based income changes are ranked from smallest to greatest, with the ‘middle’ or median value reflecting the purchasing power development of that particular (sub)population. Personal (dynamic) purchasing power may fluctuate for all kinds of reasons. For example, incomes may change as a result of a wage increase, a promotion, taking up of a (new) job or retirement. Furthermore, changes in household composition (e.g. a child moving out or a couple separating) may also result in income changes. All these changes are reflected in the dynamic purchasing power development.
For 2021, purchasing power was calculated for the same group of people as in 2020.
COVID-19 emergency support
In 2020, during the coronavirus pandemic, the Dutch Cabinet introduced a subsidy scheme for wage costs (employers) and loss of income (self-employed) in order to minimise the financial impact of the coronavirus crisis. This scheme ran from 2020 until 2022 inclusive.
Income quartiles
The mean standardised disposable income was calculated for each household member over the years 2020 and 2021. The classification into income quartiles is based on these mean values over 2020 and 2021. This is the so-called adjustment for regression-to-the-mean effects.
The income quartiles have been determined for each individual island.
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