Purchasing power, an indicator of how much we can buy with our income, rose 2.2 percent in 2020.

That is the largest growth since 2016, according to figures from Statistics Netherlands (CBS).

For employees, purchasing power rose the most at 4.3 percent thanks to wage increases.

There are two factors that influence our purchasing power: external factors such as wages, price increases and government policies and personal circumstances such as living together, breaking up or switching jobs.

The first factor had the most influence on the purchasing power of the Dutch person last year.

Collectively negotiated wages rose by 2.9 percent in 2020 despite the corona crisis.

This is because many wage agreements had already been made before the crisis and applied for the whole of 2020.

Inflation, or the degree to which life becomes more expensive, also rose 1.3 percent.

Government policy also contributed an estimated 1 percentage point to the increase in purchasing power through a number of planned tax measures, including the introduction of a two-band income tax system.

40 percent of the self-employed lost purchasing power

However, personal circumstances had a slightly depressing effect of -0.3 percent on the development of purchasing power in 2020. There were still people who found a new job or were promoted, but many people also became unemployed or earned less due to company closures.

However, the corona support measures were able to reduce that negative impact.

Mainly thanks to wage increases, the purchasing power of employees rose the most, at 4.3 percent.

The majority of the self-employed also saw their purchasing power increase, but 40 percent of the self-employed also lost purchasing power due to company closures.

On average, self-employed people could buy 1.1 percent more with the money they received.