Rising Wages Outpace Living Costs for Middle Incomes

Spending Share Wanes Even as Wages Rise
In 2019, middle-income households paid around 21,000 euros in essential and fixed expenses. In 2023 this number was 23000 euro. But the average disposable income also increased by the same period, from 45,000 to 55,000 euros. Consequently, the income share devoted to these expenses fell from 50 to 46 percent.

The increase in spending was driven by pricier groceries and higher gasoline and electricity prices. And yet, since housing costs remained stable even as wages have increased in the area, the housing cost ratio fell by 3. Housing continues to be our biggest hit to the pocketbook, factoring in the combined costs of rent, mortgages, and other associated costs, though the hit was a little less in relation stable prices and rising income.

Householders Tenants Pay Bigger Share of their Income than Homeowners
Homeowners and tenants are worlds apart. On average, homeowners use 42 percent of their income to cover essential costs. By comparison, renters in the social and private sectors shell out almost 57 per cent. One reason for the gap is that homeowners have higher incomes in general. Tenants in the private sector have similar costs to homeowners but lower levels of income and those in social housing have lower both of incomes and costs.

Government assistance also helped to ease the financial squeeze. In 2022, every household got a 380-euro energy allowance to offset the impact of soaring energy costs. Further support was provided to households close to the social minimum, thereby reducing the impact on the less well-off.