Indicators of material deprivation

Two indicators, one of material deprivation and one of severe material deprivation, have been adopted at EU level in order to compare the situation across the EU and to monitor developments. These are intended to identify households which are not able to afford a particular standard of living that is generally considered acceptable, based on questions included in the EU-SILC with the explicit intention of measuring material well-being. The questions relate to the ability of households, on the one hand, to afford certain consumer items that most households across the EU possess or are able to enjoy, and, on the other, their capacity to cover essential financial costs and to meet unexpected spending needs. They, therefore, bear directly on the purchasing power available to households and the extent to which they are under financial strain in order to maintain a certain standard of living.

Moreover, since the items included in the measure are defined at an EU rather than a national level, purchasing power is implicitly measured in a common way in the different Member States, so that variations between them in the average purchasing power that households possess should show up in the measure. In other words, countries with a relatively low median level of income and, therefore, low median purchasing power, should show a larger proportion of households that are materially deprived according to the measure than do countries with higher income levels.

The specific questions included in the EU-SILC which have been used to define the measure of material deprivation relate to the ability of households to afford:

- a telephone (including mobile phone);

- a colour TV;

- a washing machine;

- a car;

- one week's annual holiday away from home;

- a meal with meat, chicken, fish (or vegetarian equivalent) at least every other day;

- keeping the house adequately warm.

In addition, there are two questions relating specifically to the household's financial circumstances:

- being in arrears with mortgage or rent payments, utility bills, hire purchase instalments or other loan payments;

- its capacity to face unexpected financial expenses, the amount in question being set at 60% of the national median monthly income in the previous year (i.e. the monthly equivalent of the poverty threshold in the country concerned).

The measure of material deprivation adopted is to be deprived of at least three of these nine items, 'deprived' being defined to include being in arrears with the payment of bills (the last but one item in the above list) and being unable to face unexpected expenses.

Severe material deprivation

The indicator of severe material deprivation is defined in terms of households being deprived of any four of the nine items. This measure has been included, along with the risk of poverty and jobless households, as one of the Europe 2020 headline targets to indicate progress towards reducing poverty and social exclusion. Member States are, therefore, able to choose this measure, rather than the proportion of people at risk of poverty or living in jobless households, to gauge such progress.

The issues covered

The analysis here covers a number of issues relating to the measure of material deprivation:

- the proportion of people living in households which are materially deprived;

- the differing contribution to the measure of the nine items included;

- the change in material deprivation over the four years for which the measure can be calculated;

- the relationship of the measure to the median level of household income across the EU;

- the relationship of the measure to the persistent risk of poverty;

- the proportion of people who are persistently materially deprived and the relationship of this to the persistent risk of poverty.