The economic welfare of low-income households 2016

Most residents of Norway have experienced a positive development in income and living standards in recent years. At the same time, income differences have increased and the proportion of people with low income is growing. The aim of this report is to focus on the economy and living conditions of various low income groups, for example single parents, immigrants and recipients of various social security benefits.

Low income is most common among groups who to a large degree are outside the labour market. There are some groups where the prevalence of low income is especially high, for example among recipients of social assistance and newly arrived refugees who receive introduction benefits. The largest increase in the share of people with low income in recent years, however, has been among people with reduced ability to work, recipients of qualification benefits and disability pension, but the risk of low income has also increased in many other groups. The exception is old-age pensioners – in this group, the share of persons with low income has decreased steadily since the late 1990s, and is now smaller than among the total population.

Among many low income groups, it is more common to struggle financially than in the population in general. In addition, health conditions are worse among many groups with low income, and they are more dependent on various social benefits.

Some people experience only a short period of low household income. Accordingly, fewer persons have persistent low income, compared to annual low income. If we define persistent low income based on the average household equivalent income in the three-year period 2012-2014, 9 per cent of the population had persistent low income using the EU measure. The proportion with persistent low income (EU-definition) has remained stable at approximately 8 per cent for many years, and decreased between 2006 and 2011. In recent years, the share of persons with persistent low income has risen again.

In a European perspective, Norway has a small proportion with relative low income. The Norwegian low income threshold is among the highest in Europe, even after adjusting for differences in national price levels. Furthermore, the share of people lacking important material goods in Norway is small and relatively few are at risk of poverty or social exclusion. However, the risk of poverty has increased in many EU-countries after the economic crisis, especially in Eastern and Southern Europe.