Income and Expenditure Pakistan

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Income and Expenditure: Pakistan
Euromonitor International 08 February 2013

Political turbulence, low investment and fiscal mismanagement have impeded Pakistan’s economic development. While income and expenditure grew over the 2006-2011 period, per capita disposable income has yet to reach US$1,000. Political volatility and extensive rural poverty present major obstacles to national investment. Nonetheless, a large and expanding population plus healthy projected increases in income and spending levels give the South Asian market significant commercial potential.

EXECUTIVE SUMMARY
Over the 2006-2011 period, per capita annual disposable income in Pakistan grew by 18.6% in real terms, to reach PKR80,565 (US$934) in 2011. Per capita consumer expenditure performed slightly better, climbing by 22.2% in real terms over the same period to reach PKR76,721 (US$889) in 2011; The 40-44 age bracket was predominant among the most affluent, making up 28.3% of individuals in the uppermost gross income bracket of over US$150,000 (constant terms) in 2011. High-ranking positions in Pakistani business and politics are commonly held by individuals, generally men, in this age group; In 2011, 36.5% of the population aged 15+, or 47.4 million individuals, belonged to social class D. and another 42.0 million people, or 32.3% of the population aged 15+ belonged to social class E. While a huge number of people are living on very limited incomes, there are also opportunities for business models and commercial devices, such as discounters, private labels, no-frills goods and services, and price promotions; Pakistan has a substantial middle class – made up of households with between 75.0% and 125% of median income – which consisted of 12.3 million households in 2011, or 42.4% of the total number of households. This marked a 10.4% increase over the 2006-2011 period, on the back of population growth; Hotels and catering is projected be the most dynamic consumer spending category over the 2013-2020 period, expanding 41.3% in real terms, followed by education (38.6%) and health goods and medical services (37.3%); Pakistani consumers spend on alcoholic beverages and tobacco in inverse proportion to their income: in 2011, decile 1 contributed 12.2% of outlay on this category against 6.0% from decile 10. This is quite unusual as under the country’s Islamic law, alcohol is strictly forbidden, and smoking is more common in lower-income groups.
Chart 1 Per Capita Disposable Income in Asia Pacific and Australasia: 2011

US$ per capita

Source:

Euromonitor International from national statistics

DISPOSABLE INCOME, EXPENDITURE AND SAVINGS
Low incomes projected to pick up
Over the 2006-2011 period, per capita annual disposable income in Pakistan grew by 18.6% in real terms, to stand at PKR80,565 (US$934) in 2011. Per capita consumer expenditure performed slightly better, climbing by 22.2% in real terms over the same period to reach PKR76,721 (US$889) in 2011. Both indicators posted real annual growth in every year during the review period with the exception of 2008, when increasing trade and fiscal deficits, rapidly rising inflation and declining reserves depleted by high oil prices, combined with political instability that saw the resignation of the president and a major earthquake, pegged back real GDP growth from 6.8% in 2007 to 3.7% in 2008. 2009 brought corrections where both per capita annual disposable income and per capita consumer expenditure posted double-digit gains in real terms, of 11.8% and 12.9% respectively, that year. The indicators managed muted rises in 2010 when the worst ever floods in Pakistan curbed growth. However, the rebound came swiftly: in 2011, per capita annual disposable income rose by 7.1% and per capita consumer expenditure by 7.5%, both in real terms, as positive performances by the services and farming sectors underpinned recovery. Pakistan’s savings ratio declined steadily during the review p eriod, dropping from 6.0% of disposable income in 2006 to 4.7% in 2011. The savings habit is not engrained in the country, owing to low incomes and the lack of a developed banking infrastructure. Consequently, Pakistani consumers prefer to invest their spare cash in big-ticket purchases like cars and electronics. This tendency boosts short-term consumption, although can leave consumers vulnerable to sudden deteriorations in the economic climate.Pakistan’s low per capita annual disposable income means that essential spending accounts for a large share of household revenues, restricting discretionary outlay. Nondiscretionary expenditure accounted for 68.4% of all outgoings in 2011. While the headline income figures are often supplemented by remittances from family members working abroad and earnings from unofficial labour, most Pakistanis have little money left over for indulgences, and the luxury market remains niche, the preserve of a minority of wealthy and well-travelled urbanites. Income and spending are projected to post more modest growth in the short term. Real per capita annual disposable income is forecast to rise by 4.3% in 2012, and a further 2.2% in 2013. Real per capita consumer expenditure will

perform slightly better, with a 4.6% upswing in 2012 followed by a 2.3% rise in 2013, underpinned by respectable annual real GDP hikes of 3.4% and 4.7% in 2012 and 2013 respectively. Pakistan’s per capita annual disposable income will post a tepid hike of 7.3% in real terms over the 2013 -2020 period, with consumer expenditure projected to expand by 7.6% over the same period. These figures are well below the growth posted in the 2000-2007 period prior to the global economic crisis, when real per capita annual disposable income increased by 22.0% and real consumer expenditure by 24.0%, as an extensive programme of economic reforms combined with low interest rates, generous liquidity and impressive external demand saw strong real annual GDP growth over the 2000-2007 period. The country’s savings ratio will softe n marginally from 4.4% of disposable income in 2012 and 2013 to 4.1% in 2020, as Pakistan’s low annual incomes move gradually upwards, slightly improving consumer confidence. The weak forecast suggests that marketers and planners should thoroughly research the specifics of Pakistan’s consumer market before attempting a market entry, while players already active in the country should be braced for challenging trading conditions through to 2020 and amend their strategies accordingly.
Chart 2 Per Capita Annual Disposable Income, Spending and Savings Ratio: 2006-2020

US$ per capita; % of disposable income

Source: Note:

Euromonitor International from national statistics/trade sources/OECD Per capita disposable income and consumer spending are expressed in constant 2011 prices, fixed 2011 US$ exchange rate. Data for 2012-2020 are forecasts.

GROSS INCOME BY AGE
Forties bring peak earning power
Pakistan’s highest earning age group in 2011 was the 45 -49 demographic, with an average gross income of PKR163,906 (US$1,900), ahead of the 40-44 cohort with PKR162,891 (US$1,888) and the 50-54 age group with PKR161,806 (US$ 1,875). Members of these age groups generally hold high-ranking positions in Pakistani politics and business. Family, status and tradition are values that these age groups hold dear, and their spending would go on furnishings and gadgets for the home, educating and providing for children, cars and apparel. No major shifts are expected in this earnings hierarchy over the forecast period. By 2020, the 45-49 demographic will remain the topearning age group, with a gross income of PRK404,049 (US$2,016 in constant 2012 prices). The 40-44 cohort is the most sizeable group among the country’s very top earners, accounting fo r 28.3% of the population with a gross income of over US$150,000 (in constant terms) in 2011. This was followed by the 35-39 and 45-49 age brackets, which accounted for 22.3% and 17.1% of those with a gross income of over US$150,000 (constant terms) respectively in the same year. Pakistan’s population is skewed towards younger demographics, and these age groups represent the overlap of larger age bands with higher earning power and consumer choices influenced by Western trends. Such individuals are often highly successful businessmen or politicians and typically spend on signalling their wealth and status, through the acquisition of luxury vehicles, designer apparel, the hiring of household staff and luxury travel. The 40-44 age group will remain the predominant cohort among the most affluent Pakistanis in 2020, accounting for 26.0% of individuals making over US$150,000 (in constant terms), followed again by the 35-39 and 45-49 age groups, accounting for 21.8% and 15.6% of those earning over US$150,000 (constant terms) respectively. This underscores the enduring commercial potential of products and services aimed at affluent middle-aged Pakistanis.
Chart 3 Selected Income Bands by Age: 2011

Source:

Euromonitor International from national statistics

Pakistan’s total gross income map for 2011 features one “hot spot” – the red area that shows the highest total income – which demarcates a young age spectrum of 15-30, corresponding to a gross income range of US$550 to just over US$2,500 per capita. Demographics are at play in the formation of this “hot spot”: Pakistan’s population distribution is heavily skewed towards the young, with every five-year age bracket smaller than all its younger equivalents. Either still in full-time education or in fairly junior positions in the workforce, members of this cohort have very limited earning power but are interesting to marketers for their sheer weight of numbers – the 15-29 age groups contained a total of 62.3 million individuals in 2012, or 30.5% of the total population – and rising income. Among Pakistani teenagers aged 15-19, fashion and gadgets such as mobile phones are popular purchases, and Western brands enjoy cachet. Marriage at a young age (especially for women and girls) is fairly common in Pakistan, in particular in rural areas. As a result, many 20-somethings have young children and their spending will go on equipping the home, which is often shared with older generations, and acquiring childcare paraphernalia, toys and schoolbooks. In urban areas, where lifestyles tend to be more metropolitan and modern, Pakistanis in their 20s will commonly still be studying or pursuing careers, and their outlay will go on books, laptops and socialising with friends.
Chart 4 Total Gross Income Map: 2011

Source: Note:

Euromonitor International from national statistics The horizontal axis depicts the age of individuals and the vertical axis the distribution of per capita income by annual gross income brackets. The shading refers to the total income in thousand US$. The closer to red, the larger the amount of total income in that age and income range.

SOCIAL CLASS BY AGE
Young adults power a growing social class A
The social class distribution in Pakistan is heavily weighted towards lower earners, indicative of a vast consumer market for low-cost goods and services. In 2011, 36.5% of the population aged 15+, or 47.4 million individuals, belonged to social class D. The second largest category was social class E, containing another 42.0 million people, or 32.3% of the population aged 15+. With social classes D and E together making up 68.8% of the total population aged 15+ in 2011, Pakistan is home to a huge number of people living on very limited incomes. This creates opportunities for business models and commercial devices, such as discounters, private labels, no-frills goods and services, and price promotions. In 2011, Pakistan’s social class A numbered 11.5 million individua ls, or 8.8% of population aged 15+. The 30-34 cohort was the largest age bracket in social class A at 14.5%, marginally ahead of the 25-29 age group at 14.3% during the year. This reflects regional trends, which saw the 30-34 and 25-29 cohorts figure prominently in social class A across several Asia-Pacific countries in 2011. In India, Indonesia, Malaysia and Uzbekistan, the 30-34 demographic was the largest in social class A in 2011, with the 25-29 bracket coming in second. In Azerbaijan, Kazakhstan and the Philippines, the same two age groups dominated social class A in 2011, but in the reverse order. This suggests that business models built on consumer segments of comparatively affluent young adults may have success across the Asia-Pacific region. Young adults will continue to drive the growing demand for upmarket products and services in Pakistan for at least the medium term. By 2020, Pakistan’s social class A is expected to expand significantly to reach 16.0 million people, or 9.1% of the population aged 15+. The 30-34 cohort is forecast to remain the largest age bracket in social class A, accounting for 14.9% of the social class, still ahead of the 25-29 demographic on 13.9%.

Chart 5

Age Composition of Social Classes ABCDE: 2011

Source:

Euromonitor International from national statistics

HOUSEHOLD INCOME DISTRIBUTION
Inequality posts unrelenting rise
In 2011, Pakistan’s Gini index ranking was 38.9%, ranking 45th out of 85 countries for income equality. A score of zero on the Gini index suggests perfect equality and a score of 100% indicates total inequality. Although in the lower half of the global ranking, this was a fairly high placing for Pakistan’s immediate region, with India (50th), Uzbekistan (51st), Azerbaijan (55th) and Iran (63rd) all seeing higher inequality. In 2011, 34.6% of total annual disposable income accrued to the most affluent 10.0% of Pakistani households (decile 10), compared to 3.6% for the poorest 10.0% of households (decile 1). Income inequality expanded every year between 2006 and 2011, with the Gini index having stood at 36.4% in 2006. The real annual disposable income of richer Pakistanis performed best over the review period, posting sharper annual rises and avoiding the steep annual deciles seen lower down the socioeconomic scale. Decile 10’s annual disposable income expanded by a robust 23.2% in real terms over the 2006-2011 period, against a 5.0% rise in real terms for decile 1 over the period. The economic turbulence during the global economic downturn of 2008-2009 resulted in layoffs that affected lowerincome groups disproportionately, while extensive corruption acts as another barrier to social mobility, allowing the wealthy to consolidate their interests. Inequality will continue to expand in the short term, with Pakistan’s Gini index projected to rise to 39.3% in 2012 and 39.6% in 2013. Pakistan’s mean household income stood at US$6,463 in 2011, though approximately three quarters (75.3%) of households were in receipt of less than this sum. The country’s median household income – the figure that divides the household income distribution into two equal groups, half having disposable income above that amount and half with income below it – of US$4,484 is closer to the realities on the ground, and would serve as a better benchmark for marketers and planners. Pakistan’s middle class – defined as households with between 75.0% and 125% of median income – grew by 10.4% over the 2006-2011 period, an absolute increase of 1.2 million households, driven by marked population growth. The upswing took the country’s middle class to 12.3 million households in 2011, or 42.4% of the total n umber of households. Members of Pakistan’s middle class have very limited purchasing power on account of the low incomes in the South Asian country. However, steadily increasing earnings will see such households seek to improve their living standards, boosting an array of industries from white goods and consumer electronics to travel services and fast food. In 2011, a massive 53.6% of households or 15.6 million households in Pakistan had an annual disposable income of US$2,500-US$5,000 (in constant terms), the income bracket with the highest number of households, after which came households with an income of US$5,000-US$7,500 (in constant terms), accounting for 20.2% of total households or 5.9 million households. This points to a vast swathe of households that subsist on modest incomes, creating potential for money-savings products and services, from low-cost coach travel and mass-produced clothing to no-frills groceries and household products. The size of these two income brackets is such that they will remain little changed through to 2020. The household income bracket of US$2,500-US$5,000 (in constant terms) will still contain the greatest number of households at 51.4% of the total number that year, followed by the US$5,000-US$7,500 (in constant terms) band at 21.1%. This underscores the ongoing demand at the budget end of Pakistan’s consumer market. The most pronounced rise in the

number of households between 2012 and 2020 will be seen in the income bracket of US$25,000-US$35,000 (in constant terms), which is expected to expand by 54.6% to reach 401,700 households in 2020. Every income bracket above US$10,000 is forecast to post an increase of around 40.0% in its number of households over the 2012-2020 period. This will support across-the-board hikes in discretionary spending, as well as the steady expansion of Pakistan’s niche luxury market. Sectors from high -performance vehicles and private tuition to consumer electronics all stand to benefit from these gains.
Chart 6 Household Income Distribution: 2011

Source:

Euromonitor International from national statistics

CONSUMER EXPENDITURE
Hotels and catering remains the top performer
In 2011, 68.4% of total consumer expenditure in Pakistan went on non-discretionary items (food, non-alcoholic beverages and housing) with the remaining 31.6% of total outlay going on discretionary spending, such as communications and clothing and footwear. Total consumer expenditure in the country grew by a dynamic 44.1% in real terms between 2006 and 2011. The best performing consumer expenditure category was hotels and catering, with a 78.1% real increase over the 2006-2011 period, driven by increased vacation receipts over the period and a thriving fast food culture. This was followed by spending on food and non-alcoholic beverages (up 61.2% in real terms over the same period) on the back of food price inflation. The third most dynamic category during the period was household goods and services (45.7%). Subsidised land and government housing schemes enable even less affluent Pakistanis to own their own homes, and this combined with the swiftly rising number of households – which grew from 24.3 million in 2006 to 30.1 million in 2011 – supported spending in this category. Health goods and medical services was the only spending category posted a decline over the review period contracting by 2.4% in real terms. Provision of state-run health services is patchy and private healthcare and insurance are beyond the reach of many citizens, limiting take-up of medical care. The second most lacklustre category was leisure and recreation (up 8.6% in real terms over 2006-2011). Many Pakistanis still spend their leisure time at home, watching TV or doing chores, and going out often means visiting relatives, as the absence of modern leisure facilities, especially in rural areas, tamps down spending in this category. Every other category posted a 20.0% hike in real terms or more over the 2006-2011 period. The global economic downturn of 2008-2009 had a pronounced impact on Pakistani spending patterns. With the exception of spending on hotels and catering and food and non-alcoholic beverages in 2008, all categories posted negative growth annually in real terms. 2009 brought a strong rebound in all categories posting real growth with only leisure and recreation and health goods and medical services failing to notch up double-digit gains. However, in 2010 and 2011, real growth in most categories moderated. Annual disposable income and consumer expenditure move in tandem in Pakistan. Overall consumer expenditure will post healthy hikes of 8.1% and 5.6% in real terms in 2012 and 2013. Over the 2013-2020 period, hotels and catering will be the fastest growing spending category, posting a projected 41.3% rise in real terms, a continuation of its impressive performance during the review period. This will be followed by spending on education with an upswing of 38.6% in real terms forecast over the same period, driven by higher numbers of women in urban areas obtaining access to education, increasing primary school admission and rising university attendance, including a

greater role for private universities. Spending on health goods and medical services will also witness robust growth during this period (37.3% in real terms over the 2013-2020 period), driven by a markedly expanding cohort of elderly citizens. Between 2013 and 2020, Pakistan’s annual average growth in total consumer expenditure will grow by 3.7% in rea l terms, compared to a 6.0% real average annual rise over the 2000-2007 period. The still decent projection lays the grounds for opportunities for marketers and planners in sectors from communications to education, as Pakistan’s consumers steadily improve their living standards.
Chart 7 2006=100 Real Growth Index of Consumer Expenditure by Selected Category: 2006-2020

Source: Note:

Euromonitor International from national statistical offices/OECD/Eurostat Data for 2012-2020 are forecasts.

CONSUMER EXPENDITURE BY REGION
Populous Punjab dominates regional spending
In 2011, the populous Punjab region posted the greatest regional total consumer expenditure in 2011, at US$94.9 billion, or 54.0% of total consumer spending. It was followed by the Sindh region with total consumer spending of US$46.7 billion or 26.6% of total national spending. Consumer spending in Punjab rose every year between 2006 and 2011, having stood at US$50.9 billion in 2006. Each year except 2008 saw the indicator post a pronounced gain. The trend is set to continue for at least the short term, with consumer expenditure in Punjab projected to jump to US$104 billion in 2012 and US$115 billion in 2013 in nominal US$ terms. On a per household basis, Islamabad was the highest spending region in 2011, at US$8,317, with N_W_F_P (North West Frontier Province), Sindh and Punjab following behind, with expenditure levels grouped around US$6,100US$6,400 per household. The country’s capital, Islamabad is home to the headquarters of major companies and Pakistan’s Parliament, and subsequently a high concentration of relatively well -paid professionals live in the city. In 2011, Pakistan’s lowest spending region on a per household basis was FATA (Federally Administered Tribal Areas) at US$3,583. FATA is a semi-autonomous tribal zone, where militancy and violence have dramatically restricted development. FATA also had the lowest total consumer spending in 2011, at just US$1.7 billion. In line with the disparity between overall spending levels in Pakistan, category expenditure displays some variation. In 2011, spending on housing ran from 13.0% of total household outgoings in FATA to 24.7% in Sindh, while outlay on food and non-alcoholic beverages went from 37.5% of total spending in Islamabad to 57.6% in Azad Kashmir. While the precarious living conditions in FATA preclude much of a housing market, keeping outlay low, the meagre overall earnings in the less affluent regions mean that essential spending accounts for a high proportion of household budgets. The wealthier regions, meanwhile, devote higher sums to discretionary categories, meaning all categories except food and non-alcoholic beverages and housing. For example, spending on education in 2011 ran from 1.2% of total outlay in Balochistan to 3.6% in Islamabad and 3.7% in N_W_F_P. Although all regions are expected to post healthy growth rates over the 2013-2020 period, the disparity in spending levels combines with stark lifestyle differentials between rural and urban areas to create very different consumer markets across Pakistan’s regions. Volatility in regions such as FATA also precludes investment in parts of the South Asian country. The comparative sophistication of Islamabad makes it a good entry point for marketers, while the populous Punjab region, Sindh and N_W_F_P could provide interesting expansion opportunities from there.

Chart 8

Household Expenditure by Region: 2006-2011

US$ per household

Source: Note:

Euromonitor International from national statistics/UN/OECD Data are in current terms, year-on-year US$ exchange rate.

EXPENDITURE BY INCOME LEVEL
Food and housing dominant across income groups
In 2011, the wealthiest 10.0% of Pakistani households (decile 10) spent 4.9 times as much as the poorest 10.0% of households (decile 1), in the context of an annual disposable income 9.7 times as high. While the uneven distribution of income in Pakistan leads to some variation in spending patterns when analysed by income, the country’s overall low incomes mean that non-discretionary categories figure prominently for all socioeconomic levels. Food and nonalcoholic beverages absorbs the greatest slice of every decile’s outgoings, a common pattern in low-income countries. Spending on food and non-alcoholic beverages ranged from 32.2% of total outgoings for decile 10 to a sizeable 59.7% for decile 1 in 2011. Housing was the second biggest category across the deciles in 2011, accounting for similar proportions of total decile spending, from 18.2% for decile 10 to 22.7% for deciles 3-6. No other category absorbed more than 10.0% of any decile’s expenditure in 2011. All deciles upped their total spending each year between 2006 and 2011. However, at a per household level all deciles except decile 10 saw outlay contract in 2008, the first year of the global economic downturn and the year of a major earthquake and political turbulence in Pakistan. Spending growth resumed for all deciles in 2009, and every year excluding 2008 saw across-the-board hikes in per household spending. The momentum will continue in the short term, with all deciles expected to raise their spending in 2012 and 2013, both at a per household and total level. Companies prospecting the Pakistani consumer market can be reassured that the encouraging data points to opportunities both in discretionary purchases and everyday basics.
Chart 9 Household Expenditure of Deciles 1, 5 and 10 by Category: 2011

% of total consumer expenditure of each decile

Source: Note:

Euromonitor International from national statistical offices/OECD A: Food and non-alcoholic beverages; B: Alcoholic beverages and tobacco; C: Clothing and footwear; D: Housing; E: Household goods and services; F: Health goods and medical services; G: Transport; H: Communications; I: Leisure and recreation; J: Education; K: Hotels and catering; L: Miscellaneous goods and services. The figure in brackets refers to the average disposable income of households in each decile.

The category that sees spending vary the most depending on income was hotels and catering, where decile 1 households accounted for 0.7% of total category outlay in 2011, against 57.9% contributed by decile 10. While wealthy Pakistanis travel extensively and dine out regularly, their poorer compatriots would seldom use hotels and dine almost exclusively at home or at the house of relatives. The second most discretionary category in 2011 was education, where decile 1 was responsible for 0.8% of overall spending against decile 10’s 55.5%. Educational provision is patchy in poor, rural areas, and impoverished families often opt to train children to earn money rather than send them to school. University and private schools are dominated by the offspring of the more affluent. Highly unusually, spending on alcoholic beverages and tobacco attracts spending in inverse proportion to wealth: in 2011, decile 1 accounted for 12.2% of outlay on this category comp ared to 6.0% from decile 10. Under Pakistan’s Islamic law, alcohol is strictly forbidden, and smoking is more common in lower-income groups. The second least discretionary category in 2011 was health goods and medical services, where decile 1 contributed 7.0% of total category spending in 2011 versus decile 10’s 13.4% share. Health insurance plays an important role in funding treatment, keeping a lid on outlay for policyholders; however, with many low-income Pakistanis employed informally, they lack access to insurance and have to dip into savings, sell assets or prevail upon relatives to cover costly private treatment in an emergency. Spending is dominated by the wealthy in hotels and catering, where deciles 8-10 together accounted for 80.0% of total spending on the category; education, where deciles 8-10 contributed 78.3% of category spending that year; and leisure and recreation, where the share of deciles 8-10 stood at 74.9% in 2011. While this suggests that in the shortterm companies active in these sectors may wish to tailor business models to a wealthy consumer profile (for example through luxury hotels and upmarket restaurants, private schools and tuition, and high-end shopping malls and home cinema equipment), it also points to a vast untapped budget market in the future for services, such as budget motels, fast food, distance learning programmes and retail parks.
Chart 10 Proportion of Total Spending on Selected Categories by Decile: 2011

% of total consumer expenditure

Source:

Euromonitor International from national statistical offices/OECD

DEFINITIONS
Deciles
Deciles are calculated by ranking all of the households in a country by disposable income level, from the lowest earning to the highest earning. The ranking is then split into 10 equal sized groups of households. Decile 1 refers to the lowest earning 10%, through to Decile 10, which refers to the highest earning 10% of households.

Disposable income
This is gross income minus social security contributions and income taxes. Gini index: A standard economic measure of income inequality, based on a Lorenz Curve. A society that scores 0% on the Gini index has perfect equality, where every inhabitant has the same income. The higher the number over 0%, the higher the inequality, and a score of 100% indicates total inequality, where only one person receives all the income. In reality, countries tend to fall between 25% and 60%.

Gross income
Annual gross income refers to income before taxes and social security contributions from all sources including earnings from employment, investments, benefits and other sources such as remittances.

Median income
The median income is the amount which divides the household income distribution into two equal groups, half having disposable income above that amount and half having income below that amount.

Middle class
The middle class is defined as the number of households with between 75% and 125% of median income.

Savings ratio
Savings ratio is the proportion of household disposable income which is saved. The savings ratio is dependent on: the proportion of older people (as they have less motivation and capability to save); the tax system (it can encourage or discourage saving); the rate of inflation (expectations of rising prices encourage people to spend now).

Social class A
Social Class A presents data referring to the number of individuals with a gross income over 200% of an average gross income of all individuals aged 15+.

Social class B
Social Class B presents data referring to the number of individuals with a gross income between 150% and 200% of an average gross income of all individuals aged 15+.

Social class C
Social Class C presents data referring to the number of individuals with a gross income between 100% and 150% of an average gross income of all individuals aged 15+.

Social class D
Social Class D presents data referring to the number of individuals with a gross income between 50.0% and 100% of an average gross income of all individuals aged 15+.

Social class E
Social Class E presents data referring to the number of individuals with a gross income less than 50.0% of an average gross income of all individuals aged 15+.

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