Every fifth person in Estonia lived in relative poverty last year

Photo: SCANPIX

According to Statistics Estonia, in 2012, 18.7% of the Estonian population lived in relative poverty and 7.3% in absolute poverty. The overall percentage of people living in relative poverty increased 1.2 percentage points compared to the previous year, but the percentage of people living in absolute poverty decreased 0.8 percentage points.

In 2012, the income of the population increased, at the same time income inequality increased as well. Social transfers (state benefits and pensions) helped to prevent falling into poverty, as had they been included in income, the at-risk-of-poverty rate would have been 39.6% and the absolute poverty rate – 31.3%.

In 2012, a person was considered to be at-risk-of-poverty if his/her monthly equalised disposable income was below 329 euros (299 euros in 2011) and in absolute poverty if his/her monthly equalised disposable income was below 196 euros (186 euros in 2011). In 2012, the difference in income between the poorest and richest fifth of the population was 5.5-fold.

Compared to 2011, it is noticeable that the at-risk-of-poverty rate has primarily increased in the case of elderly people. In 2012, 24% of persons aged 65 and over lived in relative poverty (17% in 2011). 2% of elderly people lived in absolute poverty. At the same time, the poverty of elderly people is not as serious as the poverty of children – in 2012, 18% of children aged under 18 lived in relative poverty and 9,5% in absolute poverty.

The level of education significantly affects the risk of falling into poverty. Among persons with basic or lower education, every third was in the poorest and only every fourteenth in the richest income quintile. At the same time, one-third of people with higher education belonged to the richest fifth. Therefore, the at-risk-of-poverty and absolute poverty rates of persons with higher education (10.9% and 3.3%, respectively) were more than two and a half times smaller than those of persons with basic or lower education (28.1% and 9.3%, respectively). A higher level of education is an important prerequisite for the prevention of poverty.

More detailed information can be found in the statistics blog (only in Estonian).

The estimations are based on the Social Survey, which has been conducted by Statistics Estonia since 2004. In 2013, more than 5,700 households participated in the survey. The survey collects data about the yearly income, which is the reason why the survey of 2013 asks about the income of 2012. The yearly income is necessary for calculating the indicators of poverty and inequality. Social surveys are conducted by statistical organisations in all European Union countries on the basis of a harmonised methodology by the name of EU-SILC. Eurostat publishes the data according to the year of conducting the survey, thus Eurostat’s news release on relative poverty for 2012 published on 05.12.2013 included the indicators of relative poverty in Estonia calculated on the basis of the incomes of 2011.

At-risk-of-poverty rate is the share of persons with yearly disposable income lower than the at-risk-of-poverty threshold, and absolute poverty rate is the share of persons with yearly disposable income lower than the absolute poverty threshold. The at-risk-of-poverty threshold is 60% of the median yearly disposable income of household members, the absolute poverty threshold is the estimated subsistence minimum. Equalised disposable income is the total household income, which is divided by the sum of equivalence scales of all household members.