Household gross disposable income is estimated to have increased by 8.1% in the first quarter of 2021, compared with last year’s corresponding quarter. Disposable income per capita amounted to close to 1.1 million ISK in the quarter and is estimated to have icreased by 7% compared with the first quarter of 2020. The purchasing power of household disposable income per capita increased by 2.6% during the same period.
This is the first time Statistics Iceland publishes preliminary figures on disposable income of the household sector on a quarterly basis in accordance with the methodology of national accounts. This publication is a continuation of the first preliminary figures on an annual basis, published on April 26th 2021. Previously, the first results had been published around 15 months after the end of the reference period. Statistics Iceland will continue to publish revised figures when final information is available, e.g. tax returns from corporations and individuals.
| Household disposable income 2020-2021 | |||||
| Million ISK | 2020-Q1 | 2020-Q2 | 2020-Q3 | 2020-Q4 | 2021-Q1 |
| 1. Income | 658,959 | 698,695 | 698,991 | 715,183 | 712,357 |
| D.1 Compensation of employees, receivable | 385,241 | 396,160 | 407,833 | 408,796 | 401,846 |
| D.4 Property income | 42,575 | 42,533 | 42,498 | 42,513 | 42,890 |
| - D.41 there of interest | 15,219 | 16,293 | 16,476 | 17,885 | 15,976 |
| D.62 Social benefits other than social transfers in kind | 105,535 | 136,468 | 121,229 | 129,038 | 129,910 |
| Other income1 | 125,608 | 123,534 | 127,431 | 134,835 | 137,710 |
| 2. Expenditure | 295,207 | 312,197 | 315,888 | 318,172 | 319,217 |
| D.4 Property expenditure | 23,000 | 21,581 | 23,203 | 25,599 | 23,966 |
| - D.41 there of interest | 22,431 | 21,049 | 22,634 | 24,975 | 23,400 |
| D.5 Current taxes on income, wealth, etc. | 109,513 | 112,727 | 116,097 | 116,256 | 114,397 |
| D.61 Net social contributions | 109,658 | 110,220 | 112,038 | 115,243 | 112,970 |
| Other expenditure2 | 53,036 | 67,669 | 64,550 | 61,074 | 67,885 |
| B.6G Disposable Income (1. - 2.) | 363,752 | 386,498 | 383,103 | 397,011 | 393,140 |
| Disposable income per capita (in thousand ISK) | 994 | 1,054 | 1,041 | 1,077 | 1,063 |
| Relative change in purchasing power of disposable income per capita (%) | 4.6% | 2.3% | -0.5% | 3.9% | 2.6% |
| 1Other income include output (P.1) and other current transfers (D.7) receivable. 2Other expenditure include intermediate consumption (P.2), compensation of employees (D.1) payable, taxes on production and imports (D.2) and other current transfers (D.7) payable. | |||||
Social benefits other than social transfers in kind increased by 23%
Total income of the household sector increased by 8% in the first quarter of 2021, compared to the first quarter of the previous year. The largest increase was in social benefits other than social transfers in kind which is estimated to have increased by 23%, amounting to 18% of household total income in the quarter. The increase in retirement and pension income measured is largely due to a temporary permission to withdraw voluntary pension savings (third-pillar pension savings). The increase in social benefits is as well affected by measures taken to mitigate the economic effects of the outbreak and the rise in unemployment from Q1 2020.
Increase in household income from wages and salaries
Initial estimates suggest that household income from wages and salaries increased by 4.3% in the first quarter of 2021, compared with last year’s corresponding quarter. Taxes on salaries increased by 4.5% over the same period. The effect of salary increased due to recent collective wage agreements are present in these initial estimates. The share of wages and salaries in household total income measured at 56% in the first quarter of 2021, compared to 58% in the same period of 2020. The household sector net social contributions increased by 3% in the quarter compared with last year’s corresponding quarter.
Property income increased by close to 1% over the reference period, primarily due to a substantial increase in deposits, but household interest income increased by 5%. However, household interest expenses increased by 4% over the same period.
Methodology and data sources
The quarterly non-financial sector accounts utilise figures and indicators found in the expenditure approach, production approach and public finance statistics.
Household disposable income is defined according to the European system of accounts (ESA 2010) as the sum of compensation of employees (D.1) receivable, property income (D.4), social benefits other than social transfers in kind (D.62) and other income which include output (P.1) and other current transfers (D.7), subtracted by property expenditure (D.4), taxes on income (D.5), net social contributions (D.61) and other expenditure which includes intermediate consumption (P.2), compensation of employees (D.1) payable, taxes on production and imports (D.2) and other current transfers (D.7) payable.
Estimating preliminary figures for household disposable income, six key factors are considered:
- Compensation of employees receivable.
- Taxes on income.
- Social benefits other than social transfers in kind.
- Net social contributions.
- Property- income and expenditure.
Data sources used for estimation procedures include PAYE (Pay As You Earn) tax register, preliminary accounts from Iceland Revenue and Customs, the Financial Management Authority and financial statements from local municipalities as well as data collected from the Ministry of Finance and Economic Affairs and the Central Bank of Iceland.
Further information on the methodology of the non-financial sector accounts are in a Statistical Series from 2014.