What's left after paying the bills? Constrained spending undermines purchasing power

The "yellow vests" movement, which takes the rise in fuel prices as its starting point, brings together many demands around purchasing power. However, if we believe the National Institute of Statistics and Economic Studies (INSEE), this indicator should increase by 1.3% in 2018, under the effect of reductions in employee contributions and the tax. dwelling.

Where is the discrepancy between these rather positive figures and the much less optimistic perception of a growing part of the public? The explanation lies largely in the weight of constrained expenditure, which is proportionally very high for the most modest households.

1 – Ever more constrained spending

Purchasing power is calculated by comparing the level of prices and gross disposable income, (ie wages and social benefits, from which direct and indirect taxes are deducted). It corresponds to the amount of money that an individual can use to consume. But, in reality, this money is not entirely "available", since households have a component of so-called "pre-committed" or constrained expenditure, which corresponds to contracts that are difficult to negotiate in the short term: rents or loan repayments, insurance, electricity, gas or telephone subscriptions, insurance and mutual insurance, etc.

However, these expenses, which correspond to regular direct debits or bills, have increased significantly in proportion to income, since they have multiplied by 2.5 since the 1960s, and now "block" nearly 30% of the budget, which leaves, on average, only 70% of so-called “arbitrable” expenses, over which households feel they have control.

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If we exclude these constrained expenses, most of which are related to housing, the main items of consumption are food and transport. Two types of expenses that are not subject to invoices or subscriptions, but which are difficult to defer or drastically reduce in the short term. However, fuel alone represents almost a quarter of the transport budget of the French. Its increase is all the more noticeable as it is a recurring expense and considered to be a constraint by motorists.

2 – A burden especially for the poorest

The average of 30% pre-committed spending hides many disparities based on socio-economic profiles.

These budgetary constraints are very high among households below the poverty line: they represent well over half (60%) of their disposable income, according to a study published in March 2018 by the Department of Statistical Studies of the Ministry health and solidarity (Drees). This means that only 40% of the budget remains for all "arbitrable" expenses, including food or transport.

All types of income combined, single people, single-parent families or private tenant households are more likely to bear the brunt of constrained expenses, which often exceed 40% of their income.

3 – An indicator that exacerbates inequalities

In France, the wealth redistribution system is reputed to reduce income inequalities. However, the analysis of the “arbitrable” budget paints a much less flattering picture. Indeed, if we subtract the constrained expenses (rent, insurance, etc.) and food, the standard of living of the poorest households is drastically reduced. According to the DREES, the poorest 10% must therefore settle for an average of 180 euros per month to finance transport, equipment, leisure or clothing, while the richest 10% have an average of 1,890 euros, which is i.e. at least ten times more. It is easy to understand that spending ten euros more for a full tank of fuel does not have the same meaning for all French households.