Increase in earnings-related daily allowance and child increase for 2023
As a result of the indexation at the turn of the year there will be a small increase in the earnings-related daily allowance. In addition, the Government has proposed a temporary raise in the child increase for next year.
The amount of earnings-related daily allowance often changes slightly at the turn of the year. This is because the basic part equalling basic daily allowance is used in the calculation of earnings-related daily allowance. The basic daily allowance is in turn tied to the national pension index. The national pension index is adjusted annually and the purpose is to adjust the benefits in accordance with the changes of the price level. Roughly speaking, it means that if the prices rise in shops, the amount of benefits will also rise.
During the past year the price level has risen considerably. The Government has responded with an extra index increase which already raised the amount of earnings-related daily allowance from the beginning of August. Now the still increasing costs are also visible in the regular indexation at the turn of the year, and the amount of earnings-related daily allowance will rise again.
From the beginning of next year, or from 1 January 2023 on, the amount of the basic part of basic daily allowance and, consequently, that of earnings-related daily allowance will rise from 35.72 euros to 37.21 euros per day.
The indexation does not directly increase the earnings-related daily allowance, but changes the grounds for the determination of the earnings-related daily allowance. In practice, the earnings-related daily allowance is re-calculated using a new basic part. The effect in euros on the earnings-related daily allowance depends on at what income level the earnings-related daily allowance has been calculated. On average, earnings-related daily allowance is paid based on a monthly salary of around 2,600 euros. With this income level, the earnings-related daily allowance will increase as a result of indexation by about 80 cents per day, or a little over 17 euros per month.
The increase shown on the bank account depends on tax withholding. After taxes, the effect of the increase will be on average around 10–15 euros.
The payable earnings-related daily allowance has a maximum amount that depends on previous income level. Hence it is possible that the indexation will not raise the payable earnings-related daily allowance at all. In such situations the index increase exceeds the statutory maximum amount, and nothing remains of the increase to be paid.
We will update our earnings-related daily allowance calculator with the index increase at the turn of the year.
The child increase of earnings-related daily allowance will also rise as a result of the indexation by 4.2 per cent.
In addition, the Government has also proposed a temporary 20 per cent increase on the child increase of earnings-related daily allowance for 2023. This increase has not yet been passed by Parliament. If the increase were to happen, child increases would rise in 2023 as follows:
- increase paid for one child from 5.61 euros to 7.01 euros
- increase paid in total for two children from 8.23 euros to 10.29 euros per day
- increase paid in total for three or more children would rise from 10.61 euros to 13.26 euros per day