The median purchasing power of the population in the Caribbean Netherlands increased once again in 2016. The population of Saba enjoyed the largest increase with 4.8 percent. On Bonaire and St Eustatius, the increase was 1.9 percent and 2.4 percent respectively. On all three islands, the purchasing power of families with young children increased the most, due to the introduction of child benefit in 2016. This is reported by Statistics Netherlands (CBS) based on new figures.
Ever since the first measurement in 2012, purchasing power on the three islands has increased year by year. When purchasing power increases, income growth exceeds the average price level and more goods and services can be purchased. Saba showed the strongest increase in purchasing power each year, except in 2015. In 2016, the increase was 4.8 percent, the largest increase ever. It concerns the median purchasing power development: for one half of the population, the purchasing power rose by 4.8 percent or more, whereas for the other half, the purchasing power grew less than 4.8 percent. In 2016, purchasing power fell for 34 percent of Saba’s citizens. On Bonaire and St Eustatius, purchasing power peaked in 2015 with 4.6 percent.
Largest increase for single-parent families with minor children
Partly because of the introduction of child benefit in 2016, purchasing power particularly improved for persons who are members of a family with young children. For single-parent families with only minor children, the purchasing power increased the most: on St Eustatius by 8.0 percent, on Bonaire by 6.9 percent and on Saba by 13.1 percent. Single persons and partners of couples without children on Bonaire experienced an average decrease in purchasing power of 0.3 percent and 0.5 percent respectively.
Also more purchasing power for the elderly on St Eustatius and Saba
On both St Eustatius and Saba, purchasing power increased for all age groups. Especially members of 60-plus households on St Eustatius and Saba witnessed an increase in their purchasing power, as a result of measures taken in 2016. For instance, General Law on Old Age Pension (AOV) benefits as well as the AOV allowance were raised (extra). In addition, as from 2016 persons who do not receive a full AOV benefit can receive supplementary AOV from social relief. On St Eustatius, the group of people aged 60 and over enjoyed an increase in AOV income of 6.9 percent and on Saba this increase was 5.1 percent. On Bonaire, the AOV benefits remained unchanged and prices increased, as a result of which this group suffered a decrease in purchasing power of 0.5 percent.
Also more purchasing power for people in employment
The purchasing power of people in employment increased on all three islands in 2016. Saba showed the largest increase with 3.7 percent. Bonaire and St Eustatius followed with 2.3 and 1.6 percent respectively. On St Eustatius and Saba, the purchasing power of benefit recipients increased as well. Like the AOV benefits, Widow and Orphans Act General Insurance BES (AWW) and social relief benefits were raised (extra), boosting purchasing power. On St Eustatius, the purchasing power of benefit recipients rose by 8.9 percent and on Saba this increase was 7.4 percent. The benefits were not raised on Bonaire. This is part of the reason why purchasing power fell by 0.5 percent on this island.
Highest increase in purchasing power for lowest incomes
Purchasing power increased for all income groups in 2016. On St Eustatius, the purchasing power of the lowest incomes rose by 8.0 percent and on Saba this increase was 6.6 percent. For Bonaire’s residents, the increase was considerably lower with 2.2 percent. Households with the highest income experienced an increase in purchasing power on Saba in particular. Half of this group saw an increase of 3.3 percent or more, whereas 29 percent suffered a decrease in purchasing power.
Purchasing power development
The development of a person’s purchasing power, calculated as the change in the standardised disposable income of the household related to the person, corrected for price changes. A change in (dynamic) purchasing power can be caused by all kinds of factors. The income changes due to, for instance, a general or periodic wage increase, promotion, entering (other) employment or retirement. Changes in the household composition (a child leaves the parental home, partners split up etc.) also lead to a change in income. All these changes are discounted in the dynamic purchasing power development.
Introduction of child benefit
In 2016, child allowance in the Caribbean Netherlands was replaced by child benefit. As of January 2016, all households with minor children can apply for a fixed amount per month at Rijksdienst Caribisch Nederland. The former child allowance was calculated on the taxable income in the form of a fiscal deduction (a fixed amount per child and with a maximum of two children). This could be used, provided that the income exceeded the tax-free income threshold. The drawback of this allowance was that households with an income below the tax-free threshold did not qualify or barely qualified. With the introduction of child benefit, the income condition was abandoned and now all households with minor children receive a fixed amount per month.
Extra increase in benefits
In order to improve subsistence and to reduce poverty, the legal minimum wage and the benefits (AOV and social relief) in the Caribbean Netherlands are indexed annually on the basis of consumer price index figures (of the third quarter of the year preceding the year in which the increase will be implemented). In some quarters of 2015, Bonaire, St Eustatius and Saba had to deal with deflation. Nevertheless, the legal minimum wage and benefits were raised extra in 2016; on Bonaire by 0.9 percent, on St Eustatius by 4.0 percent and on Saba by 6.5 percent. As a result, in net terms, the amounts for the legal minimum wage and benefits remained unchanged on Bonaire, whereas on St Eustatius and Saba they showed a net increase of 3.5 percent and 6.1 percent respectively.
Supplementary AOV from social relief
The BES Social Relief Decree Policy Rules (Beleidsregels Besluit onderstand BES) were changed as of 1 January 2016. These stipulate, among others, that AOV claimants who do not receive the full AOV benefit qualify for a financial allowance. In this case, the interested party should meet all social relief conditions. This means that income and assets will be assessed in accordance with the conditions of the BES Social Relief Decree.
The AOV allowance amounts were adjusted in 2016, based on new research (2015) into the differences in price levels between the islands. Before 2016, the amounts for these allowances on St Eustatius and Saba were set at 2 percent and 8 percent respectively of the AOV benefit on Bonaire. During the new measurement in 2015, the price level on St Eustatius was 7 percent higher than in Bonaire. As a result, the allowance amount increased from 13 US dollars in 2015 to 41 US dollars in 2016. On Saba, the price level was even 10 percent higher, as a result of which the allowance amount increased from 51 US dollars in 2015 to 59 US dollars in 2016.
In the European Netherlands and on Aruba, the equivalent social provision is called ‘bijstand’.
The average of the household’s related standardised disposable income has been calculated per person over 2015 and 2016. The categorisation of the income quartile groups is based on these averages over 2015 and 2016.