Current issues related to economy, (responsible) investment, pension and income: every week an APG expert gives a clear answer to the question of the week. This time: Thijs Knaap, chief economist at APG, on whether the Dutch are more financially vulnerable than they used to be.
Last year, 60 percent of Dutch people were financially vulnerable or unhealthy. In 2021, the figure was 50 percent. Just over half (54 percent) of households can pay all bills without a problem, compared to 65 percent in 2021. This is evident from research on the financial health of Dutch households conducted by Deloitte in collaboration with Nibud and Leiden University. Does this indicate a downward trend?
“2022 was a financially bad year for many people,” Knaap says. “We saw high inflation and declines in real wages (available income after adjusting for inflation, ed.). As a result, people have less money left over at the end of the month. According to Nibud, the situation has improved somewhat this year due to wage increases implemented in many sectors and the increase in the minimum wage.” Nibud therefore sees 2023 as a year in which people need to recover from the blow of 2022. Because many people have had to dip into their savings recently, Knaap believes that a large group is actually more vulnerable now than one or two years ago. However, if we look further back, for example to the 1980s - characterized by economic contraction, unemployment and budget cuts - we are less vulnerable now. Knaap: “We are on an upward trend with occasional nudges up or down, like we just had.”
Then there is the question of what being vulnerable actually means. According to Knaap, it usually does not mean that you are slowly but surely reaching the end of your budget, but that it happens with a jolt. For example, due to the loss of a job, illness or divorce. “These kinds of shocks have always been there, and the question is, what can you do about it? Part of the solution lies with a social safety net and accessible health care. The other component is resilience: can you withstand a shock, for example by finding a (new) job? In that respect, things have been worse before. Currently, unemployment is about 3.6 percent. In the 1980s it was many times higher, especially among young people. So that resilience is quite high now.”