There is great income inequality in Europe. Western and Nordic countries have, on average, higher disposable income than many southern and eastern countries, according to a Euronews analysis.
Disposable income in the EU ranges from €9,671 in Bulgaria to €33,214 in Luxembourg
Two-thirds of the world's wealthiest countries are in Europe, according to Legatum's 2023 Prosperity Index, yet income inequality is widespread on the old continent. Average household income allocated to spending and saving varies significantly not only between EU Member States but also in other European countries.
There appears to be a clear geographical divide: the highest levels of average disposable income are reported in Western and Nordic countries, while in most southern and Eastern countries they are lower. Access to goods and services in a country depends largely on the distribution of income, which varies widely, leading to inequalities. It is difficult to accurately compare levels of disposable income across countries due to different tax regimes and price levels.
However, one way to measure and compare the differences is to look at the median equivalent disposable income per resident by purchasing power standard (PPS) in each country, which gives an idea of the standard of living.
As defined by Eurostat, the EU's statistical office, household disposable income is what they have available for spending and saving after taxes and transfers. This income is "equalized" - adjusted for household size and composition - to make it comparable to all households.
At the same time, the SPS helps the comparability of prices in different countries. It is a kind of artificial currency that removes differences in price levels, as one SPP can buy the same good or service in any country.
With that in mind, in which countries do you have the highest and lowest disposable income in Europe? And how widespread is income inequality?
In 2022, the median disposable income per resident in the EU ranges from €9,671 PPS in Bulgaria to €33,214 PPS in Luxembourg. The EU average is EUR 18,706 SPC per inhabitant.
When the countries of the European Free Trade Area (EFTA) and the candidate countries for EU membership are included, Luxembourg is followed by Norway (27,090 SPCs) and Switzerland (26,389 SPCs). This figure is just over 25,000 SPS in both the Netherlands and Austria.
The Nordic countries are above the EU average but do not manage to rank at the top
In five Scandinavian countries, the average disposable income per inhabitant is above the EU average.
While Norway came in second, none of the other countries made the top five.
Finland (20,941 CPS) ranked 10th and Sweden (20,573 CPS) took 13th position out of the 35 countries on the list.
Iceland and Denmark ranked 7th and 8th respectively.
Distribution among the "big four"
Looking at the four most populous EU countries, median disposable income was above the EU average in Germany (23,197 PSU) and France (20,575 PSU), while in Italy (18,472 PSU) and Spain (17,254 PSU) he was shorter.
In Croatia, the latest country to join the EU, median disposable income is higher than in six EU countries.
As seen in the map above, Western and Nordic European countries report the highest levels of median disposable income, while most Southern and Eastern countries have lower levels.
Candidate countries have the lowest incomes
EU candidate countries have the lowest average disposable incomes on the list.
Albania (4385 CPS) is at the bottom of the ranking, followed by North Macedonia (5988 CPS) and Turkey (6210 CPS).
Income inequality is widening
When looking at incomes in euros rather than in PPPs, the levels of income inequality in Europe appear particularly severe.
In 2022 in the EU, the range of median disposable income per inhabitant varies from 5,378 euros in Bulgaria to 45,310 euros in Luxembourg. The median disposable income for the EU as a whole is €19,083.
Apart from Luxembourg, this value is higher than €35,000 in five countries, namely Switzerland (€44,753), Iceland (€39,918), Norway (€39,206), and the United Kingdom (€37,934).
In Germany, it amounts to 25,000 euros, and in France - to 23,053 euros.
Perhaps unsurprisingly, the median disposable income in euros is significantly lower in EU candidate countries: €3,000 in Albania, Turkey, and North Macedonia.
How has disposable income changed over the past five years?
Several countries have significantly increased their median disposable income per inhabitant in euros over the past five years when looking at the percentage increase. It grew by more than 40% in nine EU member states and two candidate countries between 2017 and 2022, or the last available five years. For the EU as a whole, the change is 17%.
The biggest increase was registered in Romania - 101%, followed by Serbia (68%) and Lithuania (66%).
The percentage change in countries where the median disposable income is higher than the EU average is very small, such as 1% in Switzerland, 2% in Norway, and 5% in France and Sweden.
Median disposable income has decreased only in Turkey
Turkey is the only country where the median disposable income has decreased - specifically by 27%, or by €1,000.
Looking at changes in euros rather than percentages, the biggest increase was recorded in Luxembourg (€8,995), followed by Ireland (€6,181) and the Netherlands (€5,976). The average increase in the EU was €2,802, with Germany up €3,080 and France €1,093. /BGNES