Poverty in Andorra and inequality in households

On December 29 of last year, the Secretary of State for Economic Diversification and Innovation, Marc Galabert, and the director of the Department of Statistics, Joan Soler, presented the Survey of living conditions, a statistics that report personal income distribution and risk of poverty and social exclusion.

These data, which are collected, compiled, and published annually, correspond to the year 2019 in their original edition. Since then, the Department of Statistics has published annual editions; the most recent is the ECV 2024Published on July 28, 2025, whose income data corresponds to the year 2023. In this article we analyze the historical conclusions of the ECV 2019 and update them with the most recent data from the ECV 2024.

The ECV 2024 This confirms a general improvement in purchasing power, although also a statistical increase in the poverty risk indicator. Average incomes have risen sharply (+421% compared to 2019), which has raised the poverty threshold and, with it, the percentage of the population that technically falls below it—although severe absolute poverty has remained stable. housing prices It remains the main pressure on lower-income households.

Average household income rises

The 2019 ECV recorded an average income per consumption unit of €26,245 (+2.91% Q3 compared to 2018) and a median of €20,370 (+1.91% Q3). ECV 2024 shows a very significant leap: the The average is 37,335 euros and the median at 28,883 euros (+7.61% year-on-year), reflecting the cumulative effect of minimum wage increases and the tight labor market. Since 2019, average income has grown by 42% in nominal terms.

The distribution of income also presents differences by age groups. Those under 16 years of age are those with the lowest income per consumption unit, with a median of 18,733 euros and an average of 24,027 euros. The group between 16 and 64 years old has a median of 20,888 euros and an average of 26,268 euros, and people aged 65 and over have a median of 18,732 euros and an average of 28,742 euros.

The Gini index also increases

The population was also divided into income quintile bands (grouping the population into five bands) and it has been concluded that income has increased slightly in the top quintiles (in those with more income) and have remained stable in the lower ones. In fact, the upper quintiles (between 35,413 euros and 23,411 euros per year) have increased their income between 0.11 and 1.10 points. This increase implies that they have gone from assuming 42% of total revenues in 2018 to 43.1% in 2019, which resulted in an increase in the Gini index (from 34 in 2018 to 35 in 2019). In the ECV 2024The Gini index stands at 38,4Although this represents an improvement over the 40.0 recorded in 2023, it indicates that inequality has begun to decrease after the post-pandemic peak.

The Gini index takes values between 0 and 100 to measure inequality in such a way that 0 indicates a perfectly equal income distribution, and 100 shows that the inequality in the distribution is maximum. In any case this It also reflects the success of Andorra in its quest to attract foreign capital and a high-income population from other countries.

Thus, the difference in income is not due to inequality between the better-off classes with respect to the less favored, but among the wealthiest and the middle classes. The Government has already approved several measures that aim to improve the purchasing power of citizens such as the increase in the minimum wage interprofessional hour for the year 2021 of a 3.5%.

In addition, the Council of Ministers approved the Draft law of urgent measures in the matter of leasing of urban properties and of improvement of the purchasing power. A text that also includes an increase of up to 3.5% in the pensions of the Andorran Social Security Fund (CASS) that have a gross amount lower than the minimum interprofessional wage and solidarity pensions.

Comparing these data with those of the European Union, it can be seen that the inequality indicators in Andorra are higher than the average, a fact typical of countries with higher income levels, like Luxembourg or Switzerland, as detailed by the Secretary of State.

The rent overhead

As we already discussed in our article about the cost of living in Andorra, the highest expense to consider as a resident is the rent of the home. And it is that a significant percentage of households with the lowest incomes persist that continue to have a overload caused by housing costs, which means they spend at least a 40% or more than they come in to meet these rental expenses.

Although the subjective perception of the situation of households has been improved, "a significant percentage of households in the first quintile persist with an overburden of housing costs," said Solé. In general terms, the population with housing cost overburden goes from 13.9% in 2018 to 14.3% of 2019. The ECV 2024 shows an improvement: this indicator drops to around 9,4%-13%However, it remains high for households in the lowest income quintile. Decree 486/2024 (December 2024) introduced new rental assistance of up to 35.1% of the monthly rent for vulnerable groups (young people under 30, people over 65, single-parent families, large families, and people with disabilities).

Decreases severe and relative poverty

However, as Galabert recalled, an increase in inequality does not mean an increase in poverty, and that is precisely what happened in Andorra, where the poverty rate is much lower than that of the environment.

First, we can consider the at-risk-of-poverty threshold, which, according to Eurostat criteria, corresponds to 60% of the median income per consumption unit. In 2019 (with income data from 2018), the at-risk-of-poverty threshold in Andorra was €12,222 for households consisting of one adult, and the The population at risk of poverty was 13%, below the EU average (17%). In the ECV 2024, the poverty risk threshold has risen to 17,330 euros/year for a single adult, and the at-risk-of-poverty rate is at 16,4%This increase is mainly a statistical effect: as the median income grows sharply (+7.6%), the 60% threshold rises with it, and more households technically fall below it — even though absolute poverty has improved.

Although the median 60% is the official at-risk-of-poverty threshold, other thresholds are also calculated for the incidence of severe poverty (median 40%) or relative poverty (median 50%). In this sense, a decrease is observed in both metrics: The percentage of the population living in relative poverty decreased from 8.91% in 2018 to 7.21% in 2019; the percentage living in severe poverty decreased from 4.41% to 4.11%.. In the ECV 2024, relative poverty is located in the 8,8% and severe poverty in the 4,2% — both practically stable compared to 2019 and below the European Union average.

Low severe material deprivation

Another metric of the Living Conditions Survey (LCA) is severe material deprivation, the proportion of which in Andorra is 5.7%, according to the new criteria introduced by Eurostat in the 2019 survey, which make it impossible to compare it with the 2018 survey (3, 5%) due to the difference in methodology. If the same criteria are taken into account between 2018 and 2019 there is a decrease, going from 4.7% of 2018 to 3% of 2019. This figure is also substantially lower than both the EU average (which is located above 10%) as well as that of neighboring countries.

The AROPE indicator

The AROPE indicator (At Risk Of Poverty and / or Exclusion) can be considered a combination of the indicators of risk of poverty, material deprivation and low work intensity. This indicator increases by two points, from 15.5% to 17.5%, although this is due to the increase in the scale of severe material deprivation due to the change in methodology used. In Andorra this indicator is lower than the rest of European countries, a fact that is partly explained by the low work intensity.

The Government continues to strengthen social protection mechanisms. Solidarity benefits reached 4.67 million euros in 2024, 17.21% more than in 2023.According to the Ministry of Social Affairs, total spending on social protection in 2019 was €208.7 million (+8.11% compared to 2018); the 2025 budget (Law 4/2025) anticipates a further increase. The AROPE indicator (risk of poverty or social exclusion) stands at... 19,4% in the ECV 2024, compared to 17.5% in 2019, an increase explained in part by the threshold effect of income growth and the methodological adjustment of severe material deprivation, which falls to 5,0% since 5.7% in 2019.