How did purchasing power change between 2012 and 2022?
Since the islands of the Caribbean Netherlands became special municipalities of the Netherlands (on 10 October 2010), the Dutch government has implemented policies to improve the socio-economic circumstances of the islands’ residents. Between 2012 and 2021, this resulted in a steady increase in the median purchasing power. In 2022, however, purchasing power dropped, partly due to high inflation.
| Bonaire | St Eustatius | Saba | |
|---|---|---|---|
| 2012 | 3.2 | 4.5 | 4.6 |
| 2013 | 1.6 | 2.3 | 3.3 |
| 2014 | 2.0 | 1.1 | 3.1 |
| 2015 | 4.6 | 4.6 | 3.1 |
| 2016 | 2.6 | 2.4 | 6.3 |
| 2017 | 1.1 | 4.4 | 1.1 |
| 2018 | -0.5 | 3.4 | 0.3 |
| 2019 | 3.7 | 6.6 | 5.5 |
| 2020 | 5.6 | 2.7 | 4.7 |
| 2021 | 1.7 | 1.2 | 1.2 |
| 2022* | -4.2 | -3.3 | -1.6 |
| * Provisional figures | |||
Measures taken to improve purchasing power
Minimum wages and the benefits paid to pensioners (AOV), widows/widowers and orphans (AWW) and people on income support have increased every year, based on the inflation rate of the preceding year. In order to enable those on low incomes to keep pace with the rising cost of living, minimum wages and social benefits were systematically increased at a rate that exceeded indexation for inflation.
In 2016, child benefit was introduced and pensioners who receive only part of the full state pension entitlement are eligible for additional social security payments. Since 2019, more structural steps have been taken. Employer premiums and employee insurance were reduced, which enabled employers to raise wages, and child benefit was raised substantially to the same level as in the European Netherlands.
When incomes rise faster than average price levels, purchasing power increases. In 2016, the increase in purchasing power on Saba peaked at 6.3 percent. On St Eustatius, the increase in purchasing power peaked in 2019 (at 6.6 percent), and on Bonaire it peaked in 2020 (at 5.6 percent). In each year, purchasing power improved the most for persons in households with children, as they are more often in paid employment and more of them climb the career ladder. They have also benefited from higher child benefits.
Purchasing power during the COVID-19 pandemic
When COVID-19 reached the Caribbean Netherlands in 2020, it brought about a significant economic shock. Average prices dropped that year, leading to an increase in purchasing power. To compensate employees and self-employed for lost income, COVID-19 emergency support measures were put in place in 2020 and 2021, also contributing to improved purchasing power.
In the second half of 2021, the economy started to rebound, leading to a rise in average price levels on Bonaire and Saba and significant economic growth across all three islands in 2022. To help residents to cover high energy bills in 2022, an energy allowance was introduced for households receiving income support.
In 2022, purchasing power fell by 4.2 percent, 3.3 percent and 1.6 percent on Bonaire, St Eustatius and Saba, respectively. Even so, recipients of social benefit on Bonaire and St Eustatius still saw their purchasing power rise that year.
Purchasing power higher in 2022 than in 2012
The purchasing power index shows how purchasing power changed between 2012 and 2022. The increase in purchasing power seen on Bonaire, St Eustatius and Saba was 24.2 percent, 34.3 percent and 37.0 percent, respectively.
Since the cost of living on St Eustatius and Saba is higher than on Bonaire, policy-driven increases in the minimum wage and benefits were more frequent on those islands. This contributed to a larger rise in purchasing power on St Eustatius and Saba.
| Bonaire | St Eustatius | Saba | |
|---|---|---|---|
| 2011 | 100.0 | 100.0 | 100.0 |
| 2012 | 103.2 | 104.5 | 104.6 |
| 2013 | 104.9 | 106.9 | 108.1 |
| 2014 | 106.9 | 108.1 | 111.4 |
| 2015 | 111.9 | 113.1 | 114.9 |
| 2016 | 114.8 | 115.8 | 122.1 |
| 2017 | 117.0 | 121.2 | 124.2 |
| 2018 | 116.4 | 125.3 | 124.5 |
| 2019 | 120.7 | 133.6 | 131.4 |
| 2020 | 127.4 | 137.2 | 137.6 |
| 2021 | 129.6 | 138.9 | 139.2 |
| 2022* | 124.2 | 134.3 | 137.0 |
| * Provisional figures | |||
Purchasing power index: cumulative change in purchasing power
By multiplying year-to-year changes in median purchasing power from a certain starting year, it is possible to track the trajectory of median purchasing power from the starting point.
Note: since the purchasing power figures are calculated over a two-year period, this index does not include the income effect from population dynamics, such as immigration and emigration, during this two-year period.