The Netherlands has seen a promising shift in poverty statistics, with the total number of people living in poverty lower than previously thought. This optimistic outlook stems from a new poverty measurement approach, devised by the national statistical agency CBS in conjunction with the Netherlands Institute for Budget Information (Nibud) and the Social and Cultural Planning Office (SCP). However, beneath the surface of this positive trend, a notable shift highlights growing economic challenges among working people with a low income, who are now more likely to fall below the poverty line than their unemployed counterparts.
New definitions
A significant recalibration of poverty measures is reshaping the landscape of socio-economic discussion in the Netherlands. Previously, poverty was assessed predominantly through income levels alone, disregarding household savings or capital. This led to inflated poverty estimates, as it counted individuals with low monthly incomes yet substantial assets as living below the poverty line.
The revised method presents a more nuanced view by considering savings and the ability to maintain basic needs for a year. Now, those who may earn less but possess enough savings to sustain themselves through the year are no longer classified as impoverished. In practical terms, the newly defined poverty line sits at approximately €1,510 income per month for a single person and €2,535 for a family with two young children. This single poverty line replaces the prior multi-dimensional approaches, allowing for a standardized assessment of poverty across demographics and income brackets.
According to this updated metric, the number of individuals classified as impoverished decreased dramatically. Last year, projections estimated 825,000 people in poverty. However, the adjusted figure is now around 540,000.
CBS’s chief economist, Peter Hein van Mulligen, notes that this reduction in poverty is not merely a reflection of recalibration but rather aligns with a steady decline in poverty over the last five years.
Poverty changes its face
Although overall poverty is decreasing, a concerning trend has emerged among those who are employed. Previously, individuals receiving welfare benefits made up a significant portion of those classified as poor. Today, however, almost half of those in poverty are employed, and many struggle to make ends meet despite having jobs. Over the last five years, the share of impoverished individuals who are employed has increased by approximately 25%, indicating a shift toward a “working poor” demographic.
The concentration of poverty among working people can largely be attributed to changes in governmental support structures and a fluctuating cost of living. Past policies tended to stabilise the income of welfare recipients, ensuring that their benefits could sufficiently cover basic needs. In contrast, workers with low-paying or part-time jobs, often without supplementary welfare benefits, face increased economic vulnerability. Van Mulligen attributes this disparity to government policies favouring welfare recipients in purchasing power, inadvertently sidelining low-income workers who don’t receive the same level of protection.
Moreover, the increased cost of living, along with other higher costs such as taxes, continue to exert pressure on working people’s wallets.
Regional disparities
While the Netherlands as a whole has seen declining poverty rates, certain regions, particularly Amsterdam, report higher-than-average levels of poverty. According to the CBS and SCP, Amsterdam currently has the highest relative poverty rate in the country, with approximately 6.6% of its residents living below the poverty line. This figure surpasses that of other major cities like Rotterdam, The Hague, and areas with traditionally high poverty rates, such as the border municipality of Vaals and the island of Vlieland.
The reasons behind Amsterdam’s higher poverty rate are complex and multifaceted. As the largest city in the Netherlands, Amsterdam has a high cost of living, especially in housing, where rental prices continue to rise. This economic environment places additional strain on low-income households, particularly those with part-time or precarious jobs, who may struggle to keep up with the city’s cost of living. Additionally, Amsterdam’s high population density and diverse demographic mean that poverty manifests differently across the city’s neighbourhoods, affecting both long-term residents and newer migrants seeking employment opportunities.
Written by Jason Reed