Around 40% of Belgians risk falling below the poverty line, says economist

Around 40% of Belgians risk falling below the poverty line, says economist
Prime Minister Alexander De Croo. Credit: Belga/Laurie Dieffembacq

Around 40% of the Belgian population risks falling below the poverty line," according to economist Bruno Colmant when speaking to TL-TVI and reported by L'Echo on Tuesday.

The risk of poverty is calculated when the total net income of a household falls below 60% of the median net income.

In 2021, it was €15,443 net per year, or €1,287 euros net per month for a single person, or €32,430 net per year or €2,703 net per month for a household of two adults and two children.

Calculations based on purchasing power

Colmant based his calculations on what consumers are able to buy, instead of just income alone.

Due to the current levels of inflation, Colmant believes that this is the calculation that should be used, adding that "when you deduct from income the increase in compulsory expenditure (water, gas, electricity, and rent), you realise that many households have no more disposable income."

Just under half of Belgium's population would be impacted. "Without falling into the statistical criteria of poverty, they are confronted with this sudden inflation that exceeds their financial capabilities," explained Colmant.

Households paid €6.1 billion more for gas, electricity, and heating old between September 2021 and August 2022 compared to 2019. Although wage indexation and social security contributions compensated for part of the cost, energy bills weigh heavily on households, especially low-income ones.

Households need help

The coming winter is likely to hit households even more. Gas is already almost 15 times more expensive than in 2020, but it will continue to skyrocket. Energy costs could soar to €7,000-10,000 for an average family in the coming year, according to expert estimates,  which amounts to an increase of €600-800 each month.

To get through the winter without being cramped by energy bills, Colmant advised that  "first of all, as an individual, you have to make savings," adding that "the talk of energy sobriety must be heard by all, but the State also has a protective role to play."

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A consultative committee met on 31 August to handle the surge in energy prices. It decided to extend several measures, such as the 6% VAT on electricity and gas. But most solutions have been delegated to a European level, which means much will depend on a meeting of EU energy ministers on 9 September.

Till then, Colman suggested that "it is through taxation that we can reduce bills," proposing that Belgium increase "the minimum tax-free rate and index tax scales."  The economist also considered the possibility of "taking account of inflation in the collection of personal income tax in order to reduce the withholding tax."

However, Prime Minister Alexander De Croo warned that the next five to ten winters will be hard, even as he has called for answers at EU level.

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