Comparing the value of social benefits

The Nordic countries either have their own currency or use the euro. While most of the Nordic currencies have approximately similar values, the Icelandic Króna is an exception. Additionally, Finland uses the euro, which complicates comparisons of the value of social benefits across the Nordic countries.

For these statistics, each country reports social benefits and expenditures in their national currency. The Social Benefits working group also calculates life situations in national currencies. Therefore, it is always possible to find data specific to each country in the correct currency.

However, to compare social benefits, expenditures, and life situation calculations across countries, a standardized measure must be used. To achieve this data in national currencies are converted into Purchasing Power Standards (PPS).

The conversion from national currency into Purchasing Power Standards (PPS) is done using a factor known as Purchasing Power Parity (PPP) to convert data from national currency to PPS. Purchasing power parities represent the currency-conversion factor that corresponds to the purchasing power of individual currencies when measured against the standard euro. Consequently, the unit of purchasing power parities is PPP/euro.

The PPP-factor plays a crucial role in calculation values ad is expressed in PPS. Essentially, when a specific amount is converted using the PPP/euro factor, it enables equivalent purchasing power for goods and services across countries. PPS calculations are used to compare social benefits, social expenditures, and compensation rates for various life situations across the Nordic countries.

Eurostat reports the PPP/euro factors in its database, covering all Nordic countries except the Faroe Islands, Greenland, and Åland. Since independent PPP/euro data is not available for these three regions, the Danish PPP is used for the Faroe Islands and Greenland, while the Finnish PPP is used for Åland.  

The PPP/euro data is presented as an indicator, with the Euro's value in 2020 serving as the baseline. For these calculations, Purchasing Power Parities (EU27 2020=1) are used, with the Gross Domestic Product (GDP) as the reference category. Eurostat regularly updates this data, collecting new statistics and calculations as they become available. 

Here is a link to the Eurostat database on purchasing power parities.