INFORMA test

Data extracted in March 2023.

Planned article update: September 2024.

Highlights

In 2021, Sud-Est in Romania and Campania in Italy were the only regions in the EU to report that around half of their populations were at risk of poverty or social exclusion.

In 2021, the highest regional share for people living in a household with very low work intensity was recorded in the southern Italian region of Campania (at 29.6 %); the lowest share was observed in the Romanian capital region of Bucureşti-Ilfov (1.9 %).

Source: Eurostat (ilc_pees01n)

By global standards, most people living in the European Union (EU) are relatively prosperous. According to the OECD, the subjective well-being of the EU’s population – as measured by life satisfaction – is also relatively high. This likely reflects the EU’s high income/wealth levels and its network of established social protection systems that provide a safety net for many of the less fortunate. Nevertheless, more than one fifth (21.7 %) of the EU population was at risk of poverty or social exclusion in 2021 (see the infographic for more information).

Sociodemographic characteristics like age, educational attainment, sex, country of birth / citizenship can play an important role in shaping an individual’s living conditions. Wider societal developments, such as the impact of globalisation, coupled with unexpected shocks – for example, the global financial and economic crisis, the COVID-19 crisis, the impact of Russian military aggression against Ukraine, or the cost-of-living crisis – can also have a considerable impact. In some cases, these events can rapidly undo long-term decreases in inequality, thereby reinforcing or exacerbating patterns of inequality and exclusion.

Having shown signs of a gradual fall in inequality prior to the COVID-19 pandemic, the crisis reinforced some of the well-established inequalities in living conditions both between and within individual EU Member States. While some people were fortunate enough to continue working full-time from home (and in some cases were even able to save more of their income than usual), frontline and key workers faced increased health risks. Many people in precarious employment or working in sectors/businesses impacted by successive lockdowns faced reduced earnings, short-time work (furlough schemes / temporary lay-offs / technical unemployment) and unemployment. Indeed, the asymmetric impact of the crisis meant that in many cases it exacerbated existing inequalities: some groups in society were much more harshly affected than others, for example, the elderly, young people, parents of young children (particularly single-parents), low-wage earners, women, migrants, or people with disabilities.

For more than a year, people in the EU have witnessed a considerable increase in the cost of living. Rising prices for goods like energy and food are felt across all socioeconomic groups. However, they tend to have a greater impact on the poorest individuals in society, as they usually allocate a larger proportion of their disposable income to such ‘essential goods’.

The EU’s annual inflation rate accelerated from 0.7 % in 2020 to 9.2 % by 2022. This surge in prices experienced across the EU can be attributed, at least in part, to Russia’s military aggression against Ukraine. For example, the price of natural gas and oil increased as a result of concerns over supply shortages (with international sanctions placed on Russian energy exports), while foodstuffs and fertilisers also saw their prices rise, as the export capacity of Ukraine and Russia was cut due to the direct impact of the war. Another contributing factor to rising inflation was a post-pandemic surge in demand for a number of relatively scarce products/materials.

Full article

People at risk of poverty or social exclusion

There are two principal measures of poverty. Absolute poverty is the deprivation of basic human needs, for example, a lack of food, shelter, water, sanitation facilities, health or education (in other words, where a household’s income is insufficient to afford the basic necessities of life). By contrast, relative poverty concerns the situation where people whose income and/or resources prevent them from enjoying a ‘normal’ standard of living for the society in which they live (in other words, a situation where household income is a certain percentage below the median level).

The indicator for people at risk of poverty or social exclusion is based on both relative and absolute poverty measures. It is quite a broad concept insofar as it does not depend exclusively on a household’s level of income, also reflecting severe deprivation or quasi-joblessness. The number/share of people at risk of poverty or social exclusion combines three separate criteria (see the infographic at the start of this chapter for a breakdown) covering people who are in at least one of the following situations:

at risk of poverty – people with an equivalised disposable income (after social transfers) below the at-risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income;
facing severe material and social deprivation – as defined by those people unable to afford at least 7 out of 13 deprivation items (six related to the individual and seven related to the household) that are considered desirable (or even necessary) to lead an adequate quality of life;
living in a household with very low work intensity – where working-age adults (aged 18–64, excluding students aged 18–24 and those who are retired) worked for 20 % or less of their combined potential working time during the previous 12 months.

On 4 March 2021, the European Commission set out its ambition for a stronger social EU to focus on education, skills and jobs, paving the way for a fair, inclusive and resilient socioeconomic recovery from the COVID-19 crisis, while fighting discrimination, tackling poverty and alleviating the risk of exclusion for vulnerable groups. The European Pillar of Social Rights Action Plan outlines a set of commitments from policymakers and provides three key targets for monitoring progress. One of these targets is to reduce the number of people in the EU at risk of poverty or social exclusion between 2019 and 2030 by at least 15 million persons (of which, at least five million should be children).

Note that while regional statistics are already available for this broad measure covering people at risk of poverty or social exclusion, development work is on-going with respect to more detailed information. As such, the statistics presented below under the headings for material and social deprivation and for people living in a household with very low work intensity do not refer to indicators defined within the framework of the EU 2030 target on poverty and social exclusion.

Some 21.7 % of the EU population was at risk of poverty or social exclusion in 2021

Map 1 shows the regional distribution of those people at risk of poverty or social exclusion for NUTS level 2 regions. Note that the statistics presented for Belgium and Serbia relate to level 1 regions and that only national data are available for Germany, France, Austria and Türkiye. In 2021, the regional distribution of the share of people at risk of poverty or social exclusion appears to be somewhat skewed, as approximately two fifths of all regions in the EU (66 out of the 163 for which data are available) recorded shares equal to or above the EU average. Given that the national averages for Germany, France and Austria are all below the EU average, it is possible that the regional distribution would be even more skewed if regional data were available for these three EU Member States.

At the top end of the ranking, there were 20 regions across the EU where the share of people at risk of poverty or social exclusion was at least 35.0 % in 2021; they appear in the darkest shade of blue in Map 1. Most of this group was composed of regions located in Bulgaria, Greece or Romania, as well as several regions in southern parts of Spain and Italy. Sud-Est in Romania (50.3 %) and Campania in southern Italy (49.4 %) had the highest shares, with around half of their populations at risk of poverty or social exclusion. These two regions were followed, at some distance, by the Spanish autonomous region of Ciudad de Ceuta (43.0 %). Note that despite being one of the most affluent regions in the EU, more than one third (35.3 %) of the population was at risk of poverty or social exclusion in the Belgian Région De Bruxelles-Capitale / Brussels Hoofdstedelijk Gewest (NUTS level 1).

A relatively low proportion of people were at risk of poverty or social exclusion in a cluster of regions spread across eastern EU Member States. In 2021, there were 16 regions where less than 12.0 % of the population were at risk of poverty or social exclusion; they are shown in a yellow shade. This group was concentrated in Czechia (six regions), while there were also regions in Poland, Slovakia (both two regions; the latter concern data for 2020), Hungary and Slovenia (one region) that recorded low shares; this was also the case for four regions in northern and central Italy. The lowest shares of people at risk of poverty or social exclusion were observed in two regions of Czechia – Jihovýchod (8.7 %) and Střední Čechy (7.3 %) – and the Slovak capital region of Bratislavský kraj (5.9 %; 2020 data).

While living in a capital region may often appear an attractive proposition – better education and employment opportunities, enhanced infrastructure, improved public services and a broader range of cultural and social experiences – there are also challenges for people living in capital regions, such as higher living costs, increased competition, or a risk of isolation. People living in the capital regions of eastern EU Member States were less likely to be at risk of poverty or social exclusion than their counterparts living in the remainder of the country. For example, the proportion of people at risk of poverty or social exclusion in Slovakia (13.8 %; 2020 data) was 2.3 times as high as the share recorded in the capital region of Bratislavský kraj. A similar pattern was observed in Romania, where the share of people at risk of poverty or social exclusion was 34.5 % in 2021, which was more than twice as high as that recorded in the capital region of Bucureşti-Ilfov (16.4 %). This pattern was repeated, although to a lesser extent, in the other eastern EU Member States. By contrast, the situation was reversed in three EU Member States. As already noted, the share of people at risk of poverty or social exclusion in the Belgian capital Région De Bruxelles-Capitale/Brussels Hoofdstedelijk Gewest (NUTS level 1) was particularly high, at 35.3 %; this was almost twice as high (1.9 times) as the national average for Belgium. While regional differences across Denmark and the Netherlands were modest, the Danish and Dutch capital regions of Hovedstaden and Noord-Holland also recorded relatively high shares of people at risk of poverty or social exclusion. Hovedstaden had the highest share among the five regions of Denmark, while Noord-Holland had the joint third highest share among the 12 regions of the Netherlands.

Map 1: People at risk of poverty or social exclusion, 2021
(%, by NUTS 2 regions)
Source: Eurostat (ilc_peps11n) and (ilc_peps01n)

Figure 1 identifies the EU regions with the highest and lowest shares of people at risk of poverty or social exclusion in 2021. It also shows the regions with the biggest changes in their respective shares between 2019 and 2021. During this period, which includes the onset of the COVID-19 crisis, the proportion of people in the EU who were at risk of poverty or social exclusion increased 0.6 percentage points, rising from 21.1 % to 21.7 %.

Across the 160 NUTS level 2 regions for which data are available (note that the statistics presented for Belgium relate to NUTS level 1 regions and that only national data are available for Germany, France, Croatia and Austria), the share of people at risk of poverty or social exclusion rose in 76 regions between 2019 and 2021, remained unchanged in three regions and fell in 81. The group of 10 regions with the highest increases was composed exclusively of regions located in eastern and southern EU Member States: four regions in Italy, three in Spain, as well as a single region from each of Greece, Romania and Hungary. The biggest increases were recorded in the Greek island region of Ionia Nisia (up 7.1 percentage points) and the southern Italian region of Abruzzo (up 11.1 points).

The group of 10 regions with the biggest falls in their respective shares of people at risk of poverty or social exclusion was also composed exclusively of regions located in eastern and southern EU Member States: three regions in Romania, two in Poland, and single regions from each of Czechia, Greece, Spain, Italy and Portugal. The high level of regional variations observed in some eastern and southern EU Member States may reflect, at least to some degree, less comprehensive social safety nets, such that their shares of people at risk of poverty or social exclusion fluctuate more in line with underlying economic fortunes. Between 2019 and 2021, the biggest decrease in the share of people at risk of poverty or social exclusion was recorded in the Portuguese island Região Autónoma dos Açores, down 9.2 percentage points from 36.7 % to 27.5 %.

Figure 1: People at risk of poverty or social exclusion, 2021
(by NUTS 2 regions)
Source: Eurostat (ilc_peps11n) and (ilc_peps01n)

People at risk of poverty

The at-risk-of-poverty rate (after social transfers) is one of the three criteria used to identify people at risk of poverty or social exclusion. It identifies the proportion of the population who live in a household with an annual equivalised disposable income that is below 60 % of the national median. Note that at-risk-of-poverty rates do not measure poverty itself, rather they provide information on the share of the population with a level of income that is below a threshold which is set separately for each EU Member State. In other words, it is a measure of relatively low income compared with other residents in the country; this does not necessarily imply a low overall standard of living.

The at-risk-of-poverty rate before social transfers measures a hypothetical situation where social transfers are absent; note that pensions, such as old-age and survivors’ (widows’ and widowers’) benefits, are counted as income (before social transfers) and not as social transfers. When comparing at-risk-of-poverty rates before and after social transfers it is possible to assess the impact and redistributive effects of welfare policies. These transfers cover assistance that is given by central, state or local institutional units and include, among other types of transfers, unemployment benefits, sickness and invalidity benefits, housing allowances, social assistance and tax rebates.

In 2021, the reduction in the EU’s at-risk-of-poverty rate due to the impact of social transfers was 9.9 percentage points, with a rate of 26.7 % before social transfers and 16.8 % after. There was a relatively clear geographical divide in terms of the redistributive impact of social transfers and the extent to which they reduce the risk of monetary poverty. These differences reflect, among other influences, historical, political, economic and cultural factors. Social transfers had a particularly high impact across all regions of the Nordic Member States, Belgium and Ireland. By contrast, their impact was relatively low – in percentage point terms – across many regions in Baltic, eastern and southern EU Member States.

Figure 2 is split into two parts: the left-hand side presents those regions in the EU with the highest and lowest at-risk-of-poverty rates before social transfers. Prior to social transfers, there were seven regions in the EU where upwards of two fifths of the population faced the risk of monetary poverty in 2021. The Italian region of Campania had the highest share (52.3 %) and was the only region in the EU where the risk of monetary poverty prior to social transfers impacted more than half of the population. The other six regions with rates above 40.0 % included three more regions from southern Italy – Calabria, Sicilia and Puglia – as well as the capital region of Belgium, Severozapaden in Bulgaria and Nord-Est in Romania.

After taking account of the redistributive impact of social transfers, none of the seven regions mentioned above reported that more than two fifths of their populations were at risk of monetary poverty. Nevertheless, five out of the seven featured at the top of the ranking for those regions with the highest at-risk-of-poverty rates after social transfers (see the right-hand side of Figure 2). In 2021, Sicilia (38.1 %) and Campania (37.6 %) had the highest rates, while more than 3 in 10 people continued to experience such a risk after social transfers in Nord-Est (35.1 %), Calabria (33.2 %) and Severozapaden (31.3 %); this was also the case for two other regions in Romania – Sud-Vest Oltenia and Sud-Est. By contrast, social transfers played a greater role in reducing the risk of poverty in the Belgian capital region and in Puglia. For example, the risk of monetary poverty in Région de Bruxelles-Capitale/Brussels Hoofdstedelijk Gewest fell from 45.7 % to 25.4 %, down 20.3 percentage points as a result of social transfers. The redistributive impact of social transfers was greater in only one region, the Southern region of Ireland: the at-risk-of-poverty rate more than halved, falling from 36.6 % to 15.4 % (down 21.2 percentage points). The next largest falls – in percentage point terms – were observed in:

the other two regions of Ireland – Northern and Western (where the risk of monetary poverty fell 19.6 points) and Eastern and Midland (down 19.2 points);
three regions in Hungary – Dél-Dunántúl, Észak-Magyarország and Észak-Alföld – where the risk of monetary poverty fell 17.7–19.3 points; and
Puglia in Italy (down 19.1 points).

Looking in more detail at the EU regions with the lowest risks of monetary poverty (as shown in the bottom half of the right-hand chart), most were characterised by a relatively low risk of monetary poverty either before or after the redistributive impact of social transfers. For example, in the Slovak and Romanian capital regions of Bratislavský kraj (2020 data) and Bucureşti-Ilfov (2021 data), at-risk-of-poverty rates stood at 5.7 % and 4.9 %, respectively, before social transfers. The impact of social transfers in both of these regions was to reduce both rates by 2.0 percentage points. Among the 10 EU regions that recorded the lowest at-risk-of-poverty rates, there were only two that reported a double-digit reduction in their rates as a result of social transfers. The northern Belgian region of Vlaams Gewest and the Finnish capital region of Helsinki-Uusimaa saw their rates fall 12.1 and 13.7 percentage points, respectively, after taking account of the redistributive impact of social transfers.

Figure 2: At-risk-of-poverty rate before and after social transfers, 2021
(%, by NUTS 2 regions)
Source: Eurostat (ilc_li10_r), (ilc_li41), (ilc_li10) and (ilc_li02)

Material and social deprivation

Material and social deprivation refers to the enforced inability (rather than the choice not to do so) for people to afford five (or more) of the following items: to face unexpected expenses; to pay for one week annual holiday away from home; to pay rent, mortgage/house loan or utility bills; to eat meat, fish or an equivalent source of proteins every second day; to keep a home adequately warm; a car/van for personal use; to replace worn-out furniture; to replace worn-out clothes; at least two pairs of properly fitting shoes; to spend a small amount of money each week on themselves; to participate in a leisure activity; to get together with friends or family for a drink or meal at least once a month; an internet connection. Note that this indicator is not one of the components used to compute the number/share of people at risk of poverty or social exclusion for the EU 2030 targets (where a different definition is employed).

Prior to the COVID-19 crisis in 2019, the material and social deprivation rate had stood at 12.5 %. It increased by 0.2 percentage points following the onset of the pandemic in 2020, before falling at a relatively fast pace the year after. In 2021, 11.9 % of the EU’s total population faced material and social deprivation, equivalent to 53 million people.

There were three regions in the EU where more than two fifths of the population experienced material and social deprivation: Dytiki Elláda in Greece, Sud-Est and Sud-Muntenia in Romania

Figure 3 shows the regional distribution of material and social deprivation rates. Note that the statistics presented in this section for Belgium, Italy and Serbia relate to level 1 regions and that only national data are available for Germany, France, Austria, Portugal and Türkiye. Generally, material and social deprivation rates tended to be higher in the south-eastern corner of the EU, whereas the Nordic Member States had some of the lowest rates.

In 2021, the highest regional shares of people experiencing material and social deprivation were recorded in Dytiki Elláda in Greece (50.6 %) and Sud-Est in Romania (49.0 %). There was only one other region in the EU where more than two fifths of the population were unable to afford at least five of the material and social deprivation items: Sud-Muntenia (also in Romania). There were 12 additional regions where the share of people experiencing material and social deprivation was higher than 30.0 %: they were concentrated in southern and eastern EU Member States, with four regions in Bulgaria, three regions in each of Romania and Greece, and single regions from Spain and Hungary.

At the other end of the distribution, every region in the Nordic Member States, Czechia, Estonia, Ireland, Croatia, Cyprus, Latvia, Luxembourg, Malta, the Netherlands, Poland and Slovenia had a material and social deprivation rate that was less than the EU average of 11.9 % in 2021; this was also the case in Germany, France and Austria (for which only national data are available). There were five regions in the EU where the material and social deprivation rate was less than 3.0 %: Pohjois- ja Itä-Suomi (Finland), Gelderland and Zeeland (both in the Netherlands), and Småland med öarna and Övre Norrland (both in Sweden). The latter – Övre Norrland, which is the northernmost region in Sweden – recorded the lowest material and social deprivation rate in the EU, at 0.7 %.

Greece, Romania, Spain and Hungary were characterised by considerable inter-regional differences in material and social deprivation rates. The range between the highest and lowest regional rates in each of these EU Member States was greater than 20.0 percentage points. The largest range was recorded in Greece (29.3 points), with its highest material and social deprivation rate observed in Dytiki Elláda and its lowest in Notio Aigaio. By contrast, there were eight Member States where inter-regional differences were less than 5.0 percentage points: this was the case in Poland, the Netherlands, Ireland, Sweden, Slovenia, Croatia, Finland and Denmark. The latter recorded the smallest range (1.0 points), with its highest material and social deprivation rate observed in Syddanmark and its lowest in Midtjylland.

Figure 3: Material and social deprivation rate, 2021
(%, by NUTS 2 regions)
Source: Eurostat (ilc_mdsd08) and (ilc_mdsd07)

Despite the impact of the COVID-19 crisis, the EU’s material and social deprivation rate was 0.6 percentage points lower in 2021 than in 2019. During the period under consideration, this rate fell in approximately three quarters of the 138 regions for which data are available. The largest decrease – down 12.2 percentage points – was reported in the Romanian capital region of Bucureşti-Ilfov, where the material and social deprivation rate fell from 34.7 % to 22.5 %. Notio Aigaio in Greece was the only other region to record a double-digit fall.

Among the 34 regions that reported rising material and social deprivation rates between 2019 and 2021, some of the largest increases were concentrated in Spain. The biggest was observed in the island region of Canarias, where the material and social deprivation rate rose 12.0 percentage points; it was the only region in the EU to record a double-digit increase. Another popular holiday destination, Illes Balears, featured among a group of five more Spanish regions – together with La Rioja, Castilla y León, Aragón and Cantabria – where the material and social deprivation rate increased by at least 4.0 percentage points; this was also the case in the Romanian region of Centru, and the Greek regions of Ionia Nisia and Peloponnisos.

Figure 4: Material and social deprivation rate, 2021
(by NUTS 2 regions)
Source: Eurostat (ilc_mdsd08) and (ilc_mdsd07)

People living in a household with very low work intensity

The work intensity of a household is defined as the total number of months that working-age household members (aged 0–59) have worked during the income reference year, relative to the total number of months the same household members theoretically could have worked in the same period. Note that this indicator is not one of the components used to compute the number/share of people at risk of poverty or social exclusion for the EU 2030 targets (where a different definition is employed).

Generally, the higher the work intensity within a household (in other words, the closer people are to full employment), the less likely they are to be at risk of poverty. Very low work intensity concerns households where working-age household members work for 20 % or less of their combined potential working time during the previous 12 months. In 2021, almost one tenth (9.3 %) of all people aged 0–59 in the EU lived in a household with very low work intensity. This relationship was most commonly found for single-adult households – in particular, those with dependent children.

Figure 5 shows the share of people aged 0–59 living in a household with very low work intensity. Note that the statistics presented in this section for Belgium and Serbia relate to level 1 regions and that only national data are available for Germany, France, Austria and Türkiye. In 2021, there were seven NUTS level 2 regions where this share was more than twice as high as the EU average:

Campania and Sicilia in Italy – the former recorded the highest share in the EU, at 29.6 %;
Ciudad de Melilla, Canarias and Ciudad de Ceuta in Spain;
Ionia Nisia in Greece;
the Belgian capital of Région de Bruxelles-Capitale / Brussels Hoofdstedelijk Gewest (NUTS level 1).

In some of the EU Member States there were considerable inter-regional variations for the share of people aged 0–59 living in a household with very low work intensity. For example, the highest regional share in Italy was recorded in Campania (29.6 %), which was some 25.7 percentage points above the share recorded in Emilia-Romagna (3.9 %). There was also a relatively large range across Spanish regions: from a peak of 26.5 % in Ciudad de Melilla down to a low of 6.1 % in La Rioja. This pattern was repeated in Bulgaria, Greece and Belgium (NUTS level 1), where the range between the highest and lowest shares was 13.4–15.4 percentage points. By contrast, there were relatively minor inter-regional differences in the proportion of people aged 0–59 living in a household with very low work intensity across Finland, Slovenia, Ireland and Denmark.

Figure 5: People living in a household with very low work intensity, 2021
(%, by NUTS 2 regions)
Source: Eurostat (ilc_lvhl21) and (ilc_lvhl11)

The right-hand side of Figure 6 shows the regions with the biggest changes in their respective shares of people aged 0–59 living in a household with very low work intensity between 2019 and 2021. This share increased 1.0 percentage point across the EU, up from 8.3 % to 9.3 %. Contrary to most of the other indicators presented in this chapter, the proportion of people living in a household with very low work intensity failed to show any signs of a recovery from the impact of the COVID-19 crisis in 2021. This may reflect a lag commonly observed for a variety of labour market indicators.

Across the 160 NUTS level 2 regions for which data are available (note that the statistics presented for Belgium relate to NUTS level 1 regions and that only national data are available for Germany, France, Croatia and Austria), the share of people aged 0–59 living in a household with very low work intensity rose in 75 regions between 2019 and 2021, fell in 79 regions, and remained unchanged in six. The group of 11 regions with the highest increases were generally concentrated in southern EU Member States: four regions in Spain, two regions in Italy and a single region in Greece; they were joined by two regions from Hungary and single regions from each of the Netherlands and Poland. The biggest increases were recorded in the Greek island region of Ionia Nisia (up 14.1 percentage points) and the southern Italian region of Campania (up 11.0 points).

At the other end of the distribution, the group of 13 regions with the biggest falls in their respective shares of people aged 0–59 living in a household with very low work intensity was principally composed of regions located in eastern and southern EU Member States; it also featured the capital region of Lithuania – Sostinės regionas. The Spanish autonomous region of Ciudad de Ceuta recorded the biggest decrease in its share of people living in a household with very low work intensity – down 9.5 percentage points between 2019 and 2021. Leaving aside this atypical region, the next largest falls were reported in the Portuguese island Região Autónoma dos Açores (down 3.9 points) and the Greek capital region of Attiki (down 3.7 points).

Figure 6: People living in a household with very low work intensity, 2021
(by NUTS 2 regions)
Source: Eurostat (ilc_lvhl21) and (ilc_lvhl11)

Income distribution

GDP per inhabitant has traditionally been used to assess regional divergence/convergence in overall living standards. However, it does not capture the distribution of income within a population and thereby does little to reflect economic inequalities. The unequal distribution of income/wealth has gained increasing importance in political and socioeconomic discourse since the global financial and economic crisis and is also a key issue when analysing regions that have been ‘left behind’, or the impact of the cost-of-living-crisis.

The income quintile share ratio (S80/S20 ratio) measures the inequality of income distribution. It is calculated as the ratio between the share of income received by the 20 % of the population with the highest income (the top quintile) and the share of income received by the 20 % of the population with the lowest income (the bottom quintile). High values for this ratio suggest that there are considerable disparities in the distribution of income between upper and lower income groups. In 2021, the EU’s ratio was 5.0 – in other words, the collective income received by the 20 % of people with the highest incomes was five times as high as the collective income received by the 20 % with the lowest incomes.

Map 2 shows the regional distribution of the income quintile share ratio. Note that the statistics presented for Belgium, the Netherlands and Serbia relate to level 1 regions and that only national data are available for Czechia, Germany, Spain, France, Austria, Portugal and Türkiye. In 2021, the regional distribution of the income quintile share ratio was skewed: almost two thirds (79 out of 124) of those regions for which data are available had a ratio that was below the EU average; there were seven regions that had the same ratio, while just under one third (38 regions) had income disparities that were greater than the EU average.

The highest income quintile share ratio was recorded in the Bulgarian capital region of Yugozapaden

Across the whole of the EU, the highest income quintile share ratios in 2021 were concentrated in Bulgaria, Italy and Romania. A peak was recorded in the Bulgarian capital region of Yugozapaden, where the income of the top 20 % of earners was 8.9 times as high as the income of the bottom 20 % of earners. The next highest ratios were observed in three regions of Romania – Nord-Est (8.4), Sud-Est (8.0) and Vest (7.8) – followed by the southern Italian region of Campania (7.7).

At the other end of the range, the distribution of income was most equitable in three different regional clusters: in 2021, there was a group of regions that spanned several of the eastern EU Member States, a group in the north of Sweden and Finland, and two out of the three NUTS level 1 regions of Belgium. The income shares held by the highest earning 20 % of the population in the Slovak regions of Bratislavský kraj and Západné Slovensko (both 2020 data) were 2.6 or 2.7 times as high as those held by the lowest earning 20 % of the population; the Hungarian region of Közép-Dunántúl also recorded a relatively low ratio (2.8).

Within multi-regional EU Member States, the distribution of income often followed a different pattern in the capital region when compared with the rest of each territory. In 2021, it was commonplace to find that the capital region had the highest income quintile share ratio. Aside from the capital region of Bulgaria (already mentioned above), this was also the case in Belgium (NUTS level 1), Denmark, Lithuania, Hungary, Poland, Slovenia, Finland and Sweden. This pattern was reversed in Romania and Slovakia, as their lowest income quintile share ratios were recorded in the capital regions of Bucureşti-Ilfov and Bratislavský kraj (2020 data).

File:Income quintile share ratio (S80 S20), 2021 (ratio, by NUTS 2 regions) RYB2023.png

Map 2: Income quintile share ratio (S80/S20), 2021
(ratio, by NUTS 2 regions)
Source: Eurostat (ilc_di11_r) and (ilc_di11)

Cost-of-living crisis

The EU’s annual inflation rate was 9.2 % in 2022. At the time of writing, large numbers of people across the EU are facing significant challenges to maintain their standard of living. The cost-of-living-crisis has resulted from rapid price increases for many types of essential goods and services, in particular, energy and food. The high inflation rate may be linked to a number of factors, including (among others) disruptions to supply chains and logistical issues during the COVID-19 crisis, the impact of Russian military aggression against Ukraine, and a surge in post-pandemic demand. Many people have seen price increases outpace their income growth (in other words, they have become worse-off in real terms). As a result, the crisis has sparked debate on issues such as income inequality (see above), social welfare and social justice (how to create a fairer and more inclusive society).

Household budget surveys (HBS) are used to collect data on consumption expenditure. The data are analysed according to the [[Glossary:Classification_of_individual_consumption_by_purpose_(COICOP)|classification of individual consumption by purpose (COICOP)] and are presented according to the degree of urbanisation, which classifies local administrative units based on a combination of geographical contiguity and population density to identify cities, towns and suburbs and rural areas.

Figure 7 presents information on the structure of household consumption expenditure for four specific items that have been the closely scrutinised during the cost-of-living crisis: food and non-alcoholic beverages; electricity, gas and other fuels; the operation of personal transport equipment; and catering services. Note that the data shown relate to the overall share of each item in total household expenditure; the figures do not relate to the actual level of spending. A summary of the highest and lowest shares for national data (no data available for Ireland, Portugal, Finland and Sweden; incomplete data for Romania) is presented below:

for food and non-alcoholic beverages, the range was from a low of 9.4 % of household consumption expenditure in Luxembourg up to a peak of 27.6 % in Romania;
for electricity, gas and other fuels, it was from 2.6 % in Luxembourg up to 10.5 % in Slovakia;
for the operation of personal transport equipment, it was from 4.7 % in Belgium up to 10.4 % in Slovenia;
for catering services, it was from 2.1 % in Hungary up to 8.2 % in Cyprus.

An analysis by degree of urbanisation reveals that people living in rural areas usually spent a higher proportion of their total household expenditure on ‘essential items’; this may be linked, at least in part, to average incomes being lower in rural compared with urban areas. In 2020, the share of total household expenditure accounted for by food and non-alcoholic beverages was – subject to data availability – systematically higher for people living in rural areas than for those living in cities. In several eastern and Baltic Member States, the difference between these two shares was considerable. For example, people living in rural areas of Bulgaria spent, on average, 31.2 % of their total household expenditure on food and non-alcoholic beverages, some 9.8 percentage points higher than the corresponding share for people living in cities (21.4 %).

A similar pattern was observed for electricity, gas and other fuels and for the operation of personal transport equipment, as people living in rural areas generally spent a higher proportion of their total household expenditure on these items. In 2020, the biggest difference in the structure of expenditure on electricity, gas and other fuel was (once again) recorded in Bulgaria: on average, people living in rural areas spent 13.8 % of their total budget on these items, compared with a 7.1 % share for those living in cities. For the operation of personal transport equipment, the situation was similar: the biggest difference in the structure of expenditure was observed in Slovenia, where people living in rural areas spent, on average, 11.7 % on these items, compared with a 7.8 % share for people living in cities. Bulgaria was an exception, insofar as people living in cities devoted a slightly higher share of their total household expenditure to the operation of personal transport equipment than those living in rural areas.

For the final group of items – catering services (restaurants, cafés and canteens) – there was a different pattern. For each of the EU Member States (for which data are available), the share of total household expenditure that was accounted for by catering services was systematically higher for people living in cities than it was for people living in rural areas. For example, city-dwellers living in Luxembourg spent, on average, 6.2 % of their total expenditure on catering services, compared with a 4.1 % share for those living in rural areas. The higher proportion of total expenditure devoted to catering services by people living in cities may be linked to a variety of factors, among which:

cities typically offer a greater concentration of restaurants and cafés, providing better accessibility and more choice;
people living in cities tend to have higher incomes and may choose to spend a greater share of their discretionary income on going out;
cities tend to attract a younger demographic, with younger people more inclined to go out and socialise, while they may also be more open to exploring a broader range of catering options.

Figure 7: Structure of consumption expenditure, 2020
(%, by degree of urbanisation)
Source: Eurostat (hbs_str_t221) and (hbs_str_t226)

Source data for figures and maps

Living conditions at regional level

Data sources

Statistics on income and living conditions cover objective and subjective aspects of income, poverty, social exclusion, housing conditions, labour, education and health. They are presented in monetary and non-monetary terms for households and for individuals.

As of reference year 2021, EU statistics on income and living conditions (EU-SILC) have a new legislative basis – Regulation (EU) No 2019/1700 of the European Parliament and of the Council of 10 October 2019 establishing a common framework for European statistics relating to persons and households, based on data at individual level collected from samples. This is the first time that data collected and processed in compliance with this new legal basis are presented in the Eurostat regional yearbook.

The reference population for the EU-SILC data collection is all private households and their current members residing in the territory of an EU Member State; persons living in collective households and in institutions are generally excluded. The data presented for the EU aggregate are population-weighted averages of national data.

Household budget surveys (HBS) are used to collect data on consumption expenditure. The statistics presented are for reference year 2020; this is the sixth wave of data collection. The information was collected on a voluntary basis, under a so-called gentleman’s agreement; there is no legal basis. HBS data are collected via national surveys and involve a combination of one or more interviews and diaries maintained by households and/or individuals, generally on a daily basis. The principal focus of the data collection is household expenditure on goods and services, although information is also collected for household characteristics. This is one of the key attributes of HBS, insofar as these additional characteristics allow for deeper analyses of expenditure patterns, based on a range of socioeconomic characteristics. In the future, Regulation (EU) No 2019/1700 will provide a legal basis for the collection of household budget survey data; this is foreseen for the next wave which concerns reference year 2026.

Indicator definitions

People at risk of poverty or social exclusion

The number of people at risk of poverty or social exclusion corresponds to the number of persons who are at risk of poverty and/or facing severe material and social deprivation and/or living in a household with a very low work intensity. As well as being expressed as an absolute number, an indicator can also be compiled as a share of the total population.

In 2021, the number/share of people at risk of poverty or social exclusion was modified to reflect new EU targets introduced within the European Pillar of Social Rights Action Plan. One of these targets is for the number of people in the EU who are at risk of poverty or social exclusion to decrease by at least 15 million by 2030, with children accounting for at least one third of the overall fall. This EU 2030 target redefined two of the components used to calculate the risk of poverty or social exclusion, extending the measure of:

deprivation by introducing a new indicator for severe material and social deprivation (defined as those experiencing an enforced lack of at least 7 out of 13 deprivation items);
social exclusion for people living in households with low work intensity (though the inclusion of adults aged 60–64, who were previously omitted).

Note: while both of these revised definitions have been used to measure the overall number/share of people at risk of poverty or social exclusion for the EU 2030 targets, different definitions have been used for two of the individual components – the material and social deprivation rate and the share of people living in a household with very low work intensity – as regional data are not yet available for more detailed analyses.

At-risk-of-poverty rate

The equivalised disposable income is the total income of a household, after tax and other deductions, that is available for spending or saving, divided by the number of household members converted into equalised adults. Household members are ‘equalised’ or made ‘equivalent’ by weighting each person according to their age, using the so-called modified OECD equivalence scale (a weight of 1.0 to the first adult; 0.5 to the second and each subsequent person aged 14 years or more; 0.3 to each child aged under 14).

The at-risk-of-poverty threshold is set at 60 % of the national median equivalised disposable income after social transfers.

The at-risk-of-poverty rate before social transfers is calculated as the share of people having an equivalised disposable income before social transfers that is below the at-risk-of-poverty threshold (calculated after social transfers). Pensions, such as old-age and survivors’ (widows’/widowers’) benefits, are counted as income before social transfers and not as social transfers.

The at-risk-of-poverty rate after social transfers is calculated as the share of people having an equivalised disposable income after social transfers that is below the at-risk-of-poverty threshold (calculated after social transfers). A comparison of rates before and after social transfers gives some idea as to the impact of social transfers in terms of alleviating the risk of poverty. The at-risk-of-poverty rate after social transfers is one of three components for monitoring progress towards the EU’s 2030 target on poverty and social exclusion.

Note, these relative measures do not provide an indication of wealth or poverty directly, but rather they measure the share of people facing low incomes in comparison with other residents in the same country/region; this does not necessarily imply a low standard of living.

Material and social deprivation rate

The material and social deprivation rate is an indicator in EU-SILC that expresses an inability to afford some items considered by most people to be desirable or even necessary to lead an adequate life. The indicator distinguishes between individuals who cannot afford a certain good or service, and those who do not have this good or service for another reason, for example, because they do not want or do not need it.

The material and social deprivation rate is defined as the share of the population who could not afford at least five items out of the following list:

to face unexpected expenses;
one week annual holiday away from home;
to pay rent, mortgage/house loan or utility bills;
to eat meat, fish or an equivalent source of proteins every second day;
to keep a home adequately warm;
a car/van for personal use;
to replace worn-out furniture;
to replace worn-out clothes;
at least two pairs of properly fitting shoes;
to spend a small amount of money each week on themselves;
to participate in a leisure activity;
to get together with friends/family for a drink/meal at least once a month;
an internet connection.

Note that for the EU 2030 target concerning the share of people at risk of poverty or social exclusion, the definition used for the component on severe material and social deprivation uses a revised definition (that is different to that employed here).

People living in a household with very low work intensity

The work intensity of a household is the ratio of the total number of months that all working-age household members have worked during the income reference year and the total number of months the same household members theoretically could have worked in the same period. Worked months are measured in terms of full-time equivalents.

Within the section titled, ‘People living in a household with very low work intensity’, this indicator is defined as the proportion of people aged 0–59 living in a household where adults (defined here as those aged 18–59, excluding students aged 18–24 and those who are retired) worked for 20 % or less of their combined potential working time during the previous 12 months. Households composed only of children, of students aged less than 25 and/or people aged 60 or more are excluded from the calculation. Note that for the EU 2030 target concerning the share of people at risk of poverty or social exclusion, the definition used for the component on the share of people living in a household with very low work intensity is based on a denominator for the number of people aged 0–64 (rather than the number of people aged 0–59).

Income quintile share ratio (S80/S20)

The income quintile share ratio (S80/S20 ratio) is a measure of the inequality of income distribution. It is calculated as the ratio of total income received by the 20 % of the population with the highest incomes (the top quintile) to that received by the 20 % of the population with the lowest incomes (the bottom quintile). All incomes relate to equivalised disposable incomes (see above for an explanation).

Structure of consumption expenditure

Data for consumption expenditure are analysed by category using an EU version of the classification of individual consumption by purpose (COICOP). The data are presented in national currency, euro (€) and purchasing power standard (PPS) terms. Data collection only takes place sporadically (not on an annual basis): the information presented here concern reference year 2020. The next reference year will be 2026.

The main COICOP divisions include: food and non-alcoholic beverages (CP01); alcoholic beverages, tobacco and narcotics (CP02); clothing and footwear (CP03); housing, water, electricity, gas and other fuels (CP04); furnishings, household equipment and routine maintenance of the house (CP05); health (CP06); transport (CP07); communications (CP08); recreation and culture (CP09); education (CP10); restaurants and hotels (CP11); miscellaneous goods and services (CP12).

For 2020, HBS data concerning France, Cyprus and Malta were produced by converting 2015 data to 2020 prices using coefficients for harmonised indices of consumer prices.

Note that consumption expenditure data are not collected for life insurance and financial intermediation services indirectly measured. Note also that information on consumption expenditure linked to activities that might be considered as less acceptable by society (for example, the consumption of alcoholic beverages, narcotics or prostitution) are normally under-reported, and hence these figures may not be fully reliable. Such under-reporting may lower the value of overall expenditure, while increasing the relative weight of other expenditure categories.

Context

The COVID-19 crisis had a direct and indirect impact on vulnerable groups, such as the elderly, young people, parents of pre-school and school age children (particularly single-parents), low-wage earners, women, migrants, people with disabilities, people with precarious work contracts and those living in areas with limited or no digital connectivity. Some of these groups faced a higher risk of income loss due to increasing unemployment and reduced possibilities for teleworking, while disruptions to services (especially for health and education) may also have exacerbated existing inequalities. Aside from putting huge pressure on health care services, the crisis also led to considerable demands for additional support from social and welfare services. There was considerable political debate over how best to respond to the socioeconomic crisis resulting from the pandemic. This reflected, among other issues, the balance between concerns over public finances and the need for further spending on healthcare, education and social protection.

The EU and the EU Member States operate an open method of coordination for social protection and social inclusion. This aims to promote social cohesion and equality through adequate, accessible and financially sustainable social protection systems and social inclusion policies. As such, the EU provides a framework for national strategy development, as well as the opportunity to discuss and learn from best practices and to coordinate policies between EU Member States in areas such as: building a fairer and more inclusive EU, social protection and social inclusion, and pensions.

At the start of March 2021, the European Commission outlined its ambition for an EU that focuses on education, skills and jobs for the future and targets a fair, inclusive and resilient socioeconomic recovery. The European Pillar of Social Rights Action Plan outlines a range of actions designed to promote social rights through the active involvement of social partners and civil society. It also proposes employment, skills and social protection headline targets for the EU. One of the headline targets relates specifically to living conditions, namely that the number of people at risk of poverty or social exclusion should decrease by at least 15 million persons (of which, at least five million should be children) between 2019 and 2030.

The Action Plan highlights how the principles of the social pillar might be implemented, with the aim of building a stronger social Europe by 2030, through:

more and better jobs (creating job opportunities in the real economy; making work standards fit for the future of work; improving occupational safety and health standards; increasing labour mobility);
skills and equality (investing in skills and education to unlock new opportunities for all; building a Union of equality);
social protection and inclusion (living in dignity; fostering social inclusion and combatting poverty; promoting health and ensuring care; improving social protection).

Under the heading of fostering social inclusion and combatting poverty, the EU foresees actions to:

break intergenerational cycles of disadvantage;
review the adequacy and coverage of minimum income schemes;
provide access to affordable housing through raising the quality of the existing housing stock;
extend access to essential services, such as water, sanitation, healthcare, energy, transport, financial services and digital communications.

Direct access to

Notes

News articles

Online publications

Statistical publications

Income and living conditions (t_ilc), see:

Persons at risk of poverty or social exclusion (EU 2030 target) (t_ilc_pe)

Income distribution and monetary poverty (t_ilc_ip)

Living conditions (t_ilc_lv)

Material deprivation (t_ilc_md)

Regional statistics (t_reg), see:

Regional poverty and social exclusion statistics (t_reg_ilc)

Consumption expenditure of private households (hbs), see:

Mean consumption expenditure of private households (hbs_exp

Income and living conditions (ilc), see:

Persons at risk of poverty or social exclusion (EU 2030 target) (ilc_pe)

Persons at risk of poverty or social exclusion and intersections between sub-populations (EU 2020 strategy) (ilc_p)

Inequality (ilc_iei)

Income distribution and monetary poverty (ilc_ip)

Living conditions (ilc_lv)

Material deprivation (ilc_md)

Regional statistics by NUTS classification (reg), see:

Regional poverty and social exclusion statistics (reg_ilc)

Manuals and further methodological information

Metadata

Health variables of EU-SILC (ESMS metadata file – hlth_silc_01_esms)
Income and living conditions (ESMS metadata file – ilc_esms)

Detailed list of legislative information on EU-SILC provisions for survey design, survey characteristics, data transmission and ad hoc modules
Regulation (EC) No 1177/2003 – the central piece of legislation for EU-SILC (in force until 31 December 2020)
Regulation (EU) No 2019/1700 – establishing a common framework for European statistics relating to persons and households, based on data at individual level collected from samples – repealing legislation on EU-SILC (as of 01 January 2021)

Maps can be explored interactively using Eurostat’s statistical atlas (see user manual).

This article forms part of Eurostat’s annual flagship publication, the Eurostat regional yearbook.