Household gross disposable income is estimated to have increased by 7.5% from 2020 to 2021. Disposable income per capita amounted to 4.4 million ISK in 2021 and is estimated to have increased by 5.6% from the previous year. The purchasing power of household disposable income per capita increased by 1.1% during the same period.
Household gross disposable income is estimated to have increased by 9.3% in the fourth quarter of 2021, compared with last year’s corresponding quarter. Disposable income per capita amounted to just over 1.1 million ISK in the quarter and is estimated to have increased by 7.1% compared with the fourth quarter of 2020. Due to increased inflation rate, the purchasing power of household disposable income per capita in the fourth quarter of 2021 increased by 2.2% compared with last year’s corresponding quarter, but the consumer price index increased by 4.8% during the same period.
Increase in household income from wages and salaries
Household total income is estimated to have increased by 8.6% in 2021 from the previous year. Increase in wages and salaries bears the brunt of the total increase, increasing by roughly 155 billion ISK from the previous year or roughly 10%. For the same period, taxes on income increased by roughly 67 billion ISK or roughly 14%. The increase in wages and salaries due to collective wage agreements as well as reduction in unemployment are the significant driving factors behind the total increase. According to Statistics Iceland wage index, salaries in Iceland increased by 8.3% in 2021 from the previous year while the number of employed persons increased by 2.1% during the same period.
Household interest expenses are estimated to have increased by 20.3% in 2021 from the previous year due to increases in household borrowings and increases in interest rates. During the same period, household property income increased by 6%, where household interest income increased by 8%.
Household total income increased by 11% in the fourth quarter of 2021, compared with last year’s corresponding quarter, where wages and salaries increased by 14.8% and property income increased by 7.7%. Household total expenditure increased by 13.3% in the fourth quarter of 2021, compared with last year’s corresponding quarter, where taxes on wages and salaries increased by 19.3% and interest expenses increased by roughly 26.9%.
Social benefits other than social transfers in kind increased by 4%
Social benefits other than social transfers in kind are estimated to have increased by close to 19 billion ISK from 2020, an increase of 4%. In 2020, the largest increase in the household sector’s income was in social benefits other than social transfers in kind which increased by 25% from 2019.
The share of social benefits other than social transfers in kind of household total income was measured at close to 17% in 2021, compared with just over 17% in 2020 and 14% in 2019.
The household sector’s net social contributions increased by 4% in 2021 compared with 2020, after a 1% decrease in 2020. The decrease could largely be explained by increased unemployment as well as government measures that allowed employers to temporarily defer social contributions, which was still available in 2021 to employers of specific sectors.
Social benefits other than social transfers in kind are estimated to have decreased by 1% in the fourth quarter of 2021, compared with last year’s corresponding quarter, equivalent to 16% of household total income in the quarter. The household sector net social contribution increased by 10% in the fourth quarter of 2021, compared with last year’s corresponding quarter.
These are preliminary figures and thus Statistics Iceland will continue to publish revised figures when exhaustive information is available, e.g. tax returns from corporations and individuals.