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Many Dutch are doing well, but for some, vulnerabilities are accumulating


Published: 19 April 2023

Een stad van boven

If Dutch households are vulnerable, they are often vulnerable in several areas at once. For instance, households with high housing expenses relative to income are also more likely than average to have a poor position in the labour market and limited financial buffers, according to a new study by DNB. The results of this study stress the need to integrate a broader set of welfare indicators in public policy and address interrelated vulnerabilities.

Zooming in on vulnerable households

On the face of it, the Netherlands is doing well economically. For instance, the economy has recovered strongly from the COVID-19 crisis and unemployment and bankruptcies are historically low. The Netherlands is also doing well internationally in many respects. Yet increased energy costs have revealed a latent poverty problem, as more households are using food banks and a substantial proportion of the Dutch have little access to suitable housing. This apparent contradiction raises the question of how Dutch households are doing, what their vulnerabilities are and how these are related. To get a better picture of this, our Occasional Study looked at the situation of households in five areas in which we advise the government. These are “work and income”, “wealth and debt”, “housing”, “climate change” and “energy”. We used 15 indicators to examine whether households are vulnerable in these areas by plotting their personal situation against vulnerability criteria (see Table 1).

Table 1 - Share of households that are vulnerable, by indicator

Overview of different indicators of vulnerability

Some groups are more vulnerable than others

A proportion of households clearly suffer from an accumulation of vulnerabilities. For example, roughly the 10% most vulnerable households are vulnerable on at least five of the above indicators (see Figure 1). These households often consist of young, low-skilled or single people, and tenants and people from migrant backgrounds. As the number of vulnerabilities increases, households with these characteristics become more heavily overrepresented. By contrast, the more than 60% of households that are vulnerable on none or at most two indicators consist mainly of the higher educated, pensioners, homeowners and couples (with or without children).

Figure 1 - Number of vulnerabilities per household

Percentage of all households

Number of  vulnerabilities per household

Source: DNB, Statistics Netherlands microdata

Some vulnerabilities prove persistent

Almost one in three households has put aside less than €5,000 in savings or other liquid assets. The COVID-19 and energy crises have shown that large groups of households quickly get into trouble when financial setbacks occur. For obvious reasons, a lack of financial buffers is a common occurrence in combination with low income. The analysis shows that 1 in 3 people who were in this situation in 2012, were still in the same situation in 2020. In this group, there is again a strong overrepresentation of single people, relatively young households and people from migrant backgrounds. In both 2012 and 2020, half of this group were unemployed. People who did manage to improve their situation tend to have a higher level of education in 2020 than in 2012.

Figure 2 - Households sometimes remain in a vulnerable position for long periods of time

Percentage of primary breadwinners who were vulnerable in 2012

Huisholds stay sometimes for longer times hanging in an vulnerable position

Source: DNB, Statistics Netherlands microdata

A comprehensive approach is needed

The results from this study stress the need to integrate a broader set of welfare indicators in public policy, for example in the framework of public budgeting. A more broadly defined concept of welfare includes not only the financial aspects of policies, but also other issues that are important to people, such as their education, their healthcare and the quality of their living environment. This study shows that vulnerabilities accumulate among certain groups in society. Addressing these vulnerabilities requires an extensive range of actions that focus on high-quality healthcare, good education and social cohesion, in addition to the five areas we examined. A comprehensive approach is therefore needed, which is more likely to be adopted if the government can base its choices on a wider range of information. Forecasting the development of these indicators is therefore an important next step.   

A more broadly defined concept of welfare also allows policymakers to more explicitly take into account differences between households, which will benefit economic policies in terms of their effectiveness. This is because policies that are sensible where they concern the average household may turn out differently for vulnerable households. For example, carbon pricing may encourage large groups of households to make their homes more sustainable, while vulnerable households may face further difficulties as a result. Involving vulnerable groups in a drive aimed at making homes more sustainable therefore requires tailor-made solutions.

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