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A dash of data: Spotlight on Dutch households

9 February 2017
by Guest author

Florence Wolff, OECD Statistics Directorate

Economic growth (GDP) always gets a lot of attention, but when it comes to determining how people are doing it’s interesting to look at other indicators that focus more on the actual material conditions of households. Let’s focus on a few alternative indicators to see how households in the Netherlands are doing.

GDP and household income

Real household disposable income per capita increased at a slower pace than real GDP per capita in Q3 2016. Whereas real GDP per capita increased by 0.6 % from the previous quarter (the index increased from 102.2 in Q2 2016 to 102.8 in Q3 2016), real household income increased by 0.4% (the index increased from 97.1 in Q2 2016 to 97.5 in Q3 2016). The rise in household disposable income in Q3 2016 was driven by an increase in compensation of employees but this gain was somewhat offset by an increase in taxes, which explains the drop in the net cash transfers to households ratio (chart 2).

Chart 1 also provides a longer-term perspective and shows that Dutch households have yet to recover to their pre-crisis level of household income, which means that households have less purchasing power now than they had before the crisis. Also of note is that household income has been more volatile than GDP and has been trending upward since Q3 2014.

The divergent patterns between household disposable income and GDP are often related to changes in net cash transfers to households (chart 2), from government as well as from pension funds. For instance, government intervention that cushioned households’ material conditions in Q2 2009 resulted in a large increase in net cash transfers to households during that quarter (seen in chart 1 as a sharp increase in real household income in Q2 2009 compared with a slight drop in GDP). Since then, net transfers have been trending downwards slightly, mainly because of government acting to consolidate its finances.

Confidence, consumption and savings

Household disposable income is a meaningful way to assess material living standards, but to get a fuller picture of household material well-being one may also want to look at households’ consumption behaviour. Consumer confidence (chart 3) continued to rise in Q3 2016 (the index increased from 100.4 in Q2 2016 to 100.8 in Q3 2016). Coupled with a rise in real household income, this boosted real household consumption expenditure per capita by 0.7% in Q3 2016 (the index increased from 96.9 in Q2 2016 to 97.6 in Q3 2016) (chart 4). Real household consumption expenditures have been trending up since Q3 2014, in line with a similar trend in household income; however, Dutch households are still buying less goods and services per capita than they were before the crisis.

The households’ savings rate (chart 5), which shows the proportion that households are saving out of current income, was relatively stable at 12.3% in Q3 2016 indicating that Dutch households chose to spend the increase in their income in Q3 2016 on goods and services while preserving the level of their savings. Like in many other OECD countries, it is worth noting that Dutch households increased their savings during the economic crisis (with a peak at 16.9% in Q2 2009) – as a buffer to the deterioration in financial markets and the increased uncertainty over future income -, and that their savings rate has still not dropped back down to the levels observed before the crisis, indicating that Dutch households remain cautious.


Debt and net worth

The households’ indebtedness ratio, i.e. the total outstanding debt of households as a percentage of their disposable income, may reflect (changes in) financial vulnerabilities of the household sector and provides a useful yardstick to assess their debt sustainability. In Q3 2016, household indebtedness was 255 % of disposable income, slightly above the minimum reached in Q1 2016 (254.7%), yet remaining one of the highest levels among OECD countries. One reason for the high debt levels in the Netherlands relates to generous tax incentives on mortgage loans which constitute the bulk of household debt. Debt levels had been declining for several years because households redeemed relatively large amounts and took up fewer new mortgages. In the more recent period however, the decrease of the debt ratio has ended, mainly due to the revival of the housing market and the low interest rates.


When assessing households’ economic vulnerabilities, one should also look at the availability of assets, preferably taking into account both financial assets (saving deposits, shares, etc.) and non-financial assets (for households, predominantly dwellings). Because information on households’ non-financial assets is generally not available on a quarterly basis, financial net worth (i.e. the excess of financial assets over liabilities) is used as an indicator of the financial vulnerability of households.

In Q3 2016, financial net worth of households was at its highest level, at 477.4% of disposable income (chart 7) – an increase of 7 percentage points from the previous quarter, and of 214.1 percentage points since 2010. These levels are amongst the highest among the OECD. The increase in Dutch households’ financial net worth in Q3 2016 mainly reflects the increase of pension entitlements (a large proportion of Dutch households’ wealth). Not counting assets related to pensions, the financial net worth of Dutch households was 15.5% of disposable income in the third quarter of 2016. All in all, the increase in assets significantly outpaced the declining trend in households’ debt (chart 6).



The unemployment rate and the labour underutilisation rate (chart 8) also provide indications of potential vulnerabilities of the household sector. More generally, unemployment has a major impact on people’s well-being. In Q3 2016 the unemployment rate dropped to 5.8% confirming a downward trend observed since Q1 2014 when it reached a maximum of 7.8% in the period observed. The labour underutilisation rate, which takes into account underemployed workers and discouraged job seekers, is on average a little more than two times the size of the unemployment rate, indicating unmet aspirations among Dutch workers to work more. It is interesting to note that part-time employment is a long-standing characteristic of the labour market in the Netherlands: it is the OECD country with the highest part-time employment rate – with more than 35% of employed people working part-time – and where the share of involuntary part-timers (wanting full-time work) is low. This indicates the Dutch people’s preference for part-time work arrangements, in particular Dutch women, and therefore does not affect much the labour underutilisation rate.

One should keep in mind that households’ income, consumption and savings may differ considerably across various groups of households; the same holds for households’ indebtedness and (financial) net worth. The OECD is working on these distributional aspects and preliminary results can be found here and here. In addition, the Dutch Central Bureau of Statistics has information on income, consumption, and wealth broken down by household characteristics.

Like in many other countries, the economic crisis affected Dutch households who still haven’t recovered their pre-crisis income and consumption levels. Yet, overall, the third quarter of 2016 saw an increase of Dutch households’ material well-being, with expanding income and consumption per capita while their savings remain stable and unemployment continued to decrease.

However, to fully grasp people’s overall well-being, one should go beyond material conditions, and also look at a range of other dimensions of what shapes people’s lives, as is done in the OECD Better Life Initiative.

Useful links

For many years, OECD has been focusing on people’s well-being and societal progress. To learn more on OECD’s work on measuring well-being, visit the Better Life Initiative.

Interested in how households are doing in other OECD countries? Visit our household’s economic well-being dashboard.

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