Editor's note

The EU statistical office (Eurostat) has published an account of the member states’ welfare. EU’s data are based on GDP and population for 2014, and the most recent purchasing power indices available. Welfare in the EU is measured by the GDP per capita indices; Gross Domestic Product (GDP) per capita is still a measure of economic activity. This indication shows substantial differences among the EU-28 member states.

Measuring households’ material welfare (it’s done through actual individual consumption indices), the Baltic States are more than 30% below the EU average; Lithuania is a little bit better, i.e. about 20% below.

Vital household’s statistics: AIC per capita

Actual Individual Consumption (AIC) is a measure of material welfare of households. Actual Individual Consumption consists of goods and services actually consumed by individuals, irrespective of whether these goods and services are purchased and paid for by households, by government, or by non-profit organisations.

In international volume comparisons of consumption, AIC is often seen as the preferable measure, since it is not influenced by the fact that the organisation of certain important services consumed by households, like health and education services, differs a lot across countries. Thus, AIC per capita (expressed in Purchasing Power Standards, PPS) varied from 49% to 140% of the European Union’s average.

Only ten EU member states recorded AIC per capita above the EU average in 2014; the highest level in the EU was recorded in Luxembourg, which is 40% above the EU average. Germany and Austria were more than 20% above; they were followed by Denmark, Belgium, Sweden, the United Kingdom, Finland, France and the Netherlands which all recorded levels between 10% and 15% above the EU average.

Lower AIC per capita in the Baltics

AIC per capita for twelve EU states lay between the EU average and 30% below. In Italy, Ireland, Cyprus and Spain, the levels were 10% or less below the EU average, while Greece, Portugal and Lithuania were between 10% and 20% below.

Malta, the Czech Republic, Poland, Slovenia and Slovakia were between 20% and 30% below the average. 

Six EU states recorded AIC per capita more than 30% below the EU average: Estonia, Latvia and Hungary were between 30% and 40% below, while Croatia and Romania had AIC per capita between 40% and 45% below the EU average and Bulgaria was around 50% below.

GDP per capita: a measure of economic activity

Gross Domestic Product (GDP) per capita, a measure of economic activity, also shows substantial differences between the EU Member States. In 2014, GDP per capita expressed in PPS ranged between 45% of the EU average in Bulgaria to 263% in Luxembourg. Eleven EU member states recorded a level of GDP per capita above the EU average in 2014.

The high GDP per capita in Luxembourg is partly due to the country's large share of cross-border workers in total employment. While contributing to GDP, these workers are not taken into consideration as part of the resident population which is used to calculate GDP per capita.

The Purchasing Power Standard

The Purchasing Power Standard (PPS) is an artificial currency unit that eliminates price level differences between countries. Thus one PPS buys the same volume of goods and services in all countries. This unit allows meaningful volume comparisons of economic indicators across countries. Aggregates expressed in PPS are derived by dividing aggregates in current prices and national currency by the respective Purchasing Power Parity (PPP).

The level of uncertainty associated with the basic price and national accounts data, and the methods used for compiling PPPs imply that differences between countries that have indices within a close range should not be over-interpreted.