Household Incomes, Expenditures and Consumption as Measured by Household Budget Statistics

This publication contains the 2005 Household Budget Survey (HBS) results for households of the basic sample. The sample was designed to include 1750 households of employees, 300 households of farmers, 450 households of self-employed persons, and 500 households of pensioners. The total numbers of households in the tables are lower, as some households reported only for a period shorter than a full year. Data on the households are included proportionally to the duration of their presence in the reporting sample.

In addition to the basic sample, we also gather separate supplementary information on minimum-income households. Such households are represented in the basic sample proportionally to their real occurrence in the social group they belong to, and their number is normally insufficient for analyses. In 2004 a supplementary sample was formed of 400 households with children. The results for the low-income households of this sample will be published in the third volume, which will also include a more detailed sample description.

1. Description of the survey and sample construction

The households were selected by the non-probability quota sampling technique. Social group of household, number of dependent children (or, for pensioners’ households, number of persons), and net per capita income were chosen as the sampling characteristics of the basic sample. In the case of single-member pensioners’ households, gender was also added as a sampling characteristic. The number of households from each particular social group was not set strictly according to their proportion in overall population but as a form of compromise between maximum sample size and minimum survey costs.

a) Social group

A household’s social group is governed by its head’s social group, irrespective of other members` statuses. The household’s head is always male in complete families. In incomplete families it is mostly the parent. Only in the case of his/her economic inactivity, an active child may be regarded as the head of household. The head of a non-family household is a person with the highest income.

The group of employees includes persons in employment, i.e. workers and other kinds of employees in all sectors except for agriculture. The legal status of the employer (private, public, co-operative) is not taken into account. Those who run Ltd. companies (or partners of commandites) when concurrently working as employees with their own firm also fall within this category.

The group of farmers includes persons working in agricultural production, i.e. members of agricultural co-operatives, workers, and other employees of various types of agricultural enterprises or self-employed farmers. According to the HBS methodology, employees of agricultural enterprises who are not working directly in agricultural production (i.e. craftsmen, administrative workers etc.) are not regarded as farmers.

The Czech HBS defines self-employed persons as those who run any kind of enterprise outside agriculture. The self-employed are persons who, themselves or with a certain number of employees, on the basis of a special permit, produce goods, are engaged in trade, provide services, or do work as free-lance professionals or artists.

The heads of pensioners’ households are economically inactive persons receiving pension. For a household to belong to the group of pensioners’ households, none of its members may be employed on a long-term basis. The economic activity of such people is restricted in length within the given year, and the total annual income gained must not exceed CZK 12 000. Households not fulfilling this condition were removed from the sample.

b) Dependent children

As children unprovided-for the Czech HBS regards children of pre-school and school age, older children (up to the age of 26) who are in systematic schooling or training for their future occupation, and children who are unable to earn their own living due to a mental handicap or poor health condition and who do not receive any disability pension at the same time.

c) Net per-capita income

Net household income defined for the sake of quota sampling is calculated as gross income less the total of income taxes and compulsory health and social insurance contributions. Loans, credits, and withdrawals of savings are not included. The average per-capita income is then calculated by simply dividing the total net income by the number of persons in the given household.

As a general rule, every household complying with its reporting duties remains in the sample for the whole 12-month period - despite possible changes in some sampling characteristics (number of children, income category). Only when the head of household’s economic status is changed (for instance if he/she retires or on the contrary, resumes or begins permanent work activity), the household has to be substituted for with a new one. A household can stay in the sample for several years provided its characteristics meet sampling criteria requirements.

2. Classification of incomes and expenditures

Gross money incomes do not include withdrawn savings, received loans, or credits. These items, which otherwise have their counterparts on the expenditure side, are listed separately as "balance items". Net money incomes are obtained from gross money incomes by subtracting income taxes and compulsory health and social insurance contributions.

In the case of self-employment income (in both non-agricultural and agricultural sectors), only the part of the income used to satisfy the needs of the household or its individual members is recorded. From the methodological point of view, this constitutes net household income. In this case it is possible to record neither the corresponding income tax nor health and social insurance contributions.

Contents of money expenditures are analogous with those of incomes. Gross money expenditures do not include deposits or repayments of loans and credits. Net money expenditures differ from their gross values by the total of paid income taxes and health and social insurance contributions.

Since 1999 money expenditures have been classified according to the CZ-COICOP (Classification of Individual Consumption by Purpose). This three-level, four-digit classification scheme consists of 12 divisions, 54 groups and 145 sub-groups, and was prepared as a Czech version of the international COICOP standard to allow international comparisons of statistical indicators. Its use is mandatory for all statistical surveys conducted within the framework of the Act No. 89/1995 Coll., on the State Statistical Service.

The objective of the CZ-COICOP is to classify all kinds of individual consumption (money expenditures on goods and services) by their purpose. Its introduction has increased the number of monitored money expenditure categories (one or more HBS expenditure categories correspond to each CZ-COICOP sub-groups), and what is more important, it also considerably changed contents of many expenditure categories. As yet the CZ-COICOP expenditure groups 02.3 Narcotics, 04.2 Imputed rents and 12.2 Prostitution have not been introduced into the Czech HBS. Individual (final) consumption now excludes expenditures on building or reconstruction of houses and dwellings and the costs associated to households’ own farming production. These expenditures do not appear in the CZ-COICOP at all, and are therefore classified separately as non-consumption expenditures.
The divisions of the CZ-COICOP classification are as follows:

• 01 Food and non-alcoholic beverages
• 02 Alcoholic beverages, tobacco
• 03 Clothing and footwear
• 04 Housing, water, electricity, gas and other fuels
• 05 Furnishings, household equipment and routine household maintenance
• 06 Health
• 07 Transport
• 08 Communication
• 09 Recreation and culture
• 10 Education
• 11 Restaurants and hotels
• 12 Miscellaneous goods and services

3. What is in the publication

The first set of tables includes aggregate results by social groups. As a complement, results for average reporting household have been estimated and added to the tables. In order to correct disproportions in representation of different social groups, the results have been re-weighted according to the social structure of the population based on the 2002 Microcensus. Pensioners’ households with economically active members and households of the unemployed, neither of which is surveyed in the HBS, have been assigned, for the purpose of weight estimation, to households of workers.

In 2005 the average number of members of the sample households calculated in this way was 2.46, and was thus somewhat smaller than as found out in the 2002 Microcensus (2.50 members). The difference was caused by the fact that, due to the complexity and extent of reporting, households with more members and multi-generational households were under-represented in the HBS sample. The used sampling quotas secure representative composition of each social group sample when it comes to the number of dependent children and net income per-capita and, indirectly through these characteristics, also to the number of economically active members. Proportions based on these criteria were therefore close to those obtained from the Microcensus.

The implementation of the CZ-COICOP classification brought about an increase in the number of divisions and groups as well as changes in contents of items. The 2005 results are thus fully comparable only with the results from the 1999 publication.

The OECD (Oxford) scale was used for calculations of equivalised incomes in Set 2 (i.e. the first adult = 1.0, each following adult (persons older than 13) = 0.7, each child (13 years and younger) = 0.5).

Net money income serves as the dominating sorting criterion in Volume I of the HBS results. In parts 3 to 5, the results are presented by income quantiles, which makes the data easier to analyse in time series and to compare internationally. Households were first ordered according to their per-capita incomes, and then split into a certain amount of equally populated groups (10 groups in the case of deciles, 5 in the case of quintiles). Afterwards, results were calculated separately for each of these groups. The sample size enables calculation of decile results only for all households in total. For households of employees, self-employed, and for pensioners’ households quintiles were used.

4. Notes on the tables

Annual data were obtained by totalling detailed monthly income and expenditure items, averaging the totals per household member, and rounding the results to whole CZK. All aggregate and detailed items were calculated in mutual independence directly from the primary data. Data in non-monetary (quantity) units were processed in the same way and rounded to two decimal places. Relative figures were come by from averages before rounding. Structures are expressed as percentages with one decimal position. Due to rounding the total pertaining to a structure might not be exactly 100.

The complete set of 6 tables is published with respect of only the main classification criteria, i.e. social groups (per capita averages) and deciles of households in total.

Table 1 presents an overview of numbers and compositions of households, including the average number of OECD units (adult equivalents). Further, the table contains basic income and expenditure indicators and balance items. In addition to that, net money expenditure is given in the traditional classification by kind (food, consumer goods, services, payments).

Table 2 concerns gross money income. It contains detailed data on all kinds of income classified by source (incomes from work, social and other incomes). When comparing gross incomes of social groups with each other, it is necessary to keep in mind that in the case of the self-employed what is recorded is net amounts transferred to cover the household’s or its members’ needs. Analogously, gross expenditure of such people excludes taxes and contributions to health and social security schemes.

Table 3 presents detailed consumer expenditure items classified according to the CZ-COICOP and all other items belonging under money expenditure.

Table 4 provides the user with an overview of money expenditures for the CZ-COICOP divisions and data on expenditure structure, all this in three levels. For the CZ-COICOP divisions (01-12) the structural coefficients are given in relation to total net money expenditures, structure of expenditure within each division is given in relation to the total of the division. In division 01-Food and Non-Alcoholic Beverages, the proportions of expenditure on particular sorts of food and beverages are also given in relation to total expenditure on food and non-alcoholic beverages respectively.

Table 5 presents detailed data on income and expenditure in kind. Products of households’ own farming activities or products acquired free of charge in some other way (picked, received as gifts) are recorded in physical units (kg, pieces, litres) and only later assigned money values to by a statistician using the average prices in the place of the household’s residence. Therefore, the data on consumption in kind and total consumption (purchases + consumption in kind) are published both in value and quantity units. Further, the table includes values of products and services received as gifts. Households’ expenditures in kind are also assessed and presented.

Table 6 shows selected indicators of housing conditions (type of dwelling, type of heating, and number and living area of rooms), which can be used in analysing households` expenditures on housing. According to the above-described methodology, expenditures are always calculated as per capita averages within the whole presented sub-group, which means that not only those households that actually have such an expenditure enter the computation of the average, but all the households in the sub-group do. Presentation of these data without a more detailed explanation or without a possibility to re-calculate them according to individual housing characteristics can produce misleading results (for example rental payments are calculated as per all flats, despite the fact that owner occupiers pay no rent). What the table further brings out is the use of consumer durables in households.

For other sets of tables the number of income indicators was reduced and the pertaining data joined together in a single table (Table 1-2). From the other tables only the overview of consumer expenditure (Table 4) and income and expenditure in kind (Table 5) are presented.

Data on incomes, expenditures and consumption based on the 2005 HBS will be published in 2006 in the Czech Statistical Office’s publication Labour and social statistics, Group 30 - Living standard in the following three volumes:

Volume I: Incomes, expenditures, and consumption of the HBS households - by social groups and annual net per-capita income

Volume II: Incomes, expenditures, and consumption of the HBS households - by number of unprovided-for children

households of employees with children not provided for - by number of children and economically active members

household of employees without unprovided-for children and households of pensioners - by number of members and gender

Volume III: Incomes, expenditures, and consumption of the HBS households on minimum income