Do minimum incomes allow to live a life in dignity in Belgium?

Are minimum incomes adequate?

Can you live a life in dignity with a minimum income in Belgium? We investigate this by comparing the net disposable incomes from social assistance (living wage and income guarantee for the elderly or IGO), social security (minimum unemployment benefit, minimum disability benefit and minimum pension) and employment (average guaranteed minimum monthly income or GMMMI and low wage) with the level of the reference budget for different types of families. In the simulation of net disposable income, we take into account child benefits, school allowances, work bonus, social security contributions and personal income tax. In this way, we check whether families have sufficient financial resources to participate fully in society.

We conclude that income from the minimum unemployment benefit or social assistance is too low to live in dignity when renting a house on the private rental market. Even if an adult in the family works full-time on the minimum wage (GMMMI), the income is often insufficient, especially if there are additional expenses such as childcare or a private car. For families with children, child benefits (including social allowances) are insufficient to cover the minimum costs of children in different regions. These shortfalls are greater for older children.

Furthermore, we assume that family members are in good health, have the necessary skills to manage a limited budget, rent a good quality house and do not need a car. As these 'ideal circumstances' do not apply to many vulnerable families, in some cases the minima will be even less adequate than our calculations show.

Does it pay to work?

Finally, we examine whether it pays to move from a living wage or minimum unemployment benefit to a job with a minimum or low wage (2/3 of the median wage in Belgium). We see that a full-time job can be a significant financial step forward. But if families do not have access to affordable public transport and/or affordable childcare, this advantage diminishes. In particular, the cost of owning a car weighs heavily. We also see that minimum wages themselves are often too low to allow full participation in society. A low wage is (just) enough for most families as long as there are no additional necessary expenses. However, families cannot build up financial reserves.

Full-time work is certainly not always possible or desirable for various reasons. However, we can see that working half-time at a low wage provides (almost) no financial benefit to people on a minimum income. Moreover, the income is not sufficient for a family to live in dignity. Some measures, such as the socio-professional exemption, can counteract this by making part-time work pay more, but they are rarely used in practice.