Poverty

In 2017 some 113 million people in the European Union were at risk of poverty or social exclusion. This is over one-fifth of the population. At just below 17 percent, the share was lower in the Netherlands. Income inequality in the Netherlands is also relatively low and has been around the same level since the start of the century.

People living in a household with an income below the European poverty threshold – which is less than 60 percent of the national median (equivalised) disposable income – are at risk of poverty. In 2017, the share of EU inhabitants at risk of poverty varied between 9.1 percent in the Czech Republic and 23.4 percent in Romania. The Netherlands has the fifth lowest at-risk-of-poverty rate: 13.2 percent. This is well below the EU average of 16.9 percent. Poverty thresholds are determined per country and depend on the country’s level of prosperity.

Social exclusion occurs when those members of a household who are able to work have little or no paid employment or are facing serious financial problems. According to these criteria, almost one in six people in the Netherlands are at risk of poverty or social exclusion. In Romania and Bulgaria, this is the case for almost 40 percent of the population.

14.1Risk of poverty or social exclusion (% of population), 2017

	Risk of poverty or social exclusion	Severe financial constraints	In households with low work intensity
Czech Republic	12.2	3.7	5.5
Finland	15.7	2.1	10.7
Slovakia	16.3	7.0	5.4
Netherlands	17.0	2.6	9.5
Slovenia	17.1	4.6	6.2
France	17.1	4.1	8.1
Denmark	17.2	3.1	10.0
Sweden	17.7	1.1	8.8
Austria	18.1	3.7	8.3
Germany	19.0	3.4	8.7
Malta	19.2	3.3	6.7
Poland	19.5	5.9	5.7
Belgium	20.3	5.1	13.5
Luxembourg	21.5	1.2	6.9
United Kingdom	22.0	4.1	10.1
EU	22.4	6.6	9.5
Ireland	22.7	5.2	16.2
Portugal	23.3	6.9	8.0
Estonia	23.4	4.1	5.8
Cyprus	25.2	11.5	9.4
Hungary	25.6	14.5	6.6
Croatia	26.4	10.3	12.2
Spain	26.6	5.1	12.8
Latvia	28.2	11.3	7.8
Italy	28.9	10.1	11.8
Lithuania	29.6	12.4	9.7
Greece	34.8	21.1	15.6
Romania	35.7	19.7	6.9
Bulgaria	38.9	30.0	11.1

Income inequality varies greatly

In countries with relatively few incomes below the poverty line, income disparities are usually limited. The Netherlands ranks among the most egalitarian countries, together with Slovakia, Slovenia, the Czech Republic, Finland and Belgium. These countries score best on two different measures of income inequality: the Gini coefficient and the so-called 80/20 ratio. The Gini coefficient ranges between 0 and 1. A value of 0 means that everyone has exactly the same income, while 1 means maximum inequality: one person has all the income and all the others have none. The 80/20 ratio indicates the ratio between the highest and the lowest incomes (in 20 percent-groups).

The Nordic EU countries have the most egalitarian societies according to both standards. Large income gaps are mainly found in Eastern and Southern Europe. The gap is largest in Bulgaria with a Gini coefficient of 0.40 and a 80/20 ratio of 8.2, meaning incomes in the upper income group (80^th percentile) are over eight times as high as in the lowest income group (20^th percentile).

Sources

Eurostat – At-risk-of-poverty rate

Eurostat – People at risk of poverty or social exclusion

Eurostat – Severe material deprivation rate

Eurostat – Low work intensity

Eurostat – Income quintile share ratio (S80/S20)

Eurostat – Gini coefficient