| Definition |
The annual low-income threshold is set to 50 or 60 per cent of the median after-tax income per consumption unit. When calculating persistent low-income over a three year-period, the low-income threshold is set to 50 or 60 per cent of the average median during the same time period. When calculating persistent low-income over a four year-period, persons with income below the annual low-income threshold the current year, and below the low-income threshold in at least two of the previous three years, are regarded as having persistent low income. After-tax income per consumption unit equals total household taxable and non-taxable income, minus taxes, divided on the number of consumption units in the household. The number of consumption units is calculated by using the 'modified' OECD scale or the EU scale, where the first adult is given a value of 1, any additional adult is given the value of 0.5, and each child is given a value of 0.3. The number of consumption units in a household consisting of two adults and two children is thus 2.1, according to this method. |
