The risk-of-poverty rate measures the proportion of the population whose income is below the at-risk-of-poverty threshold.
It shows how many people in Germany have an income that is less than 60 per cent of the median income.
Income is considered to be the median net household income. The at-risk-of-poverty threshold in 2016 was about 13.500 euros per year for a single person and 28,300 euros for a household with two adults and two children under the age of 14.
The risk-of-poverty rate is not an absolute measure of people's poverty but of their income relative to other people. So it measures relative poverty but not absolute poverty. In this way it provides information about income distribution in Germany. For targeted policy-making it is useful to differentiate by socio-economic group.
As not all households that fall beneath the defined income threshold are actually suffering from material deprivation, this can be looked at separately. A person is considered to be materially deprived if they cannot afford to buy certain everyday goods that are necessary for a minimum standard of living. The concept for specifically calculating material deprivation from surveys of individuals and households is currently being revised.
The data source is the Socio-Economic Panel (SOEP). As the indicator refers to household income, changes in household structures may influence the data over time.