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Scottish Economic Statistics 2002

chapter three: Household Sector

This chapter contains data on the household sector, an economic sector defined in the National Accounts. The majority of analysis presented, however, applies to households themselves and is based on survey data. There are approximately 2.2 million households in Scotland and, while persons belonging to these households will account for the majority of economic activity within the household sector, the National Accounts definition contains some other activity, such as non-profit institutions serving households. Thus income and expenditure data from different sources are not comparable.

The general income distribution in Great Britain is heavily skewed towards lower incomes with four fifths of people having household incomes of less than £400 per week. There is a long tail to the right with a small number of very high incomes which inflates the mean. Scotland has a similar, but less skewed distribution than Great Britain with fewer people on very low incomes or very high incomes. Scotland's mean income is lower than Great Britain's, mainly because there are less extreme values at the upper end of the distribution.

The mean equivalised household income (after housing costs) in 1999/00 was £296 per week in Scotland, and £302 in Great Britain. Median incomes are far closer at £245 in Scotland and £246 in Great Britain, supporting the picture shown in chart 3.1 whereby Great Britain has more extreme values of income, which affect the mean but not the median. Household incomes have risen considerably over the last twenty years. Mean income has risen by over 50 per cent in real terms whereas median income rose by almost 40 per cent.

Chart 3.1: Household Income Distribution, Scotland and Great Britain, averaged over 1997/98-1999/00

Income

Table 3.1 shows the overall composition of household sector income in Scotland. As mentioned above, these Regional Accounts household income figures are not directly comparable with those from the Family Resources Survey and the derived Households Below Average Income analysis (tables 3.2 to 3.4) for a number of reasons, detailed in the box on page 93.

Low Income

Table 3.2 shows that 23 per cent of people in Scotland lived in low income households in 1999/00 - defined as having an equivalised net household income (after housing costs) below 60 per cent of the GB median. The chance of being below the low income threshold was not the same for all family types; lone parent families were far more likely to have low incomes (57 per cent) than couples without children (12 per cent).

These figures refer to the relative income poverty measure - which benchmarks household income against the GB median for that year. There is an alternative measure - absolute income poverty - which compares income against the GB median for 1996/97 (uprated to remove the effects of inflation). The absolute indicator complements the relative indicator by allowing for the effect of rises in incomes over time. The relative indicator does not show much of a fall between 1996/97 and 1999/00, and this might be interpreted as no improvement in the incomes of those below the threshold. However, it is clear from the absolute indicator that the incomes of those people at the lower end of the income distribution have improved considerably since 1996/97 - the proportion of people below the absolute threshold fell from 25 per cent to 19 per cent. However, because incomes as a whole have been rising at a greater rate than inflation (as illustrated in chart 3.2) the relative threshold has risen and most of these families are still below the threshold.

Chart 3.2: Mean and Median Income (after housing costs) at December 2000 prices, Scotland and Great Britain

When looking at income by employment status, (table 3.3) as expected the unemployed are the most likely group to have incomes below the threshold - 62 per cent of this group in 1999/00 (AHC). Only 5 per cent of those in full-time employment were below the threshold in the same year.

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