Poverty and inequality in Estonia have not decreased

Compared to 2005, the difference between the incomes of the richest fifth (the fifth income quintile) and the poorest fifth (the first income quintile) of the population did not change. Likewise, the at-risk-of-poverty rate remained in 2006 more or less at the same level as it was a year earlier. In 2006, 259,000 persons were living in the risk-of-poverty.

Increase in salaries and the economic growth as well as the decrease in unemployment continued in 2006, but this did not have a similar effect on the livelihood of all sectors of the population. By age groups, the risk-of-poverty was the biggest among the persons in retirement age — a third of them lived in poverty. The main reason behind this was a slower increase in the income of the 65-year-olds and older people — in 2006 the increase in the equalised disposable income for the overall population was 22%, but for the people in retirement age it was only 16%. At the same time, the poverty of children decreased — during the year, the at-risk-of-poverty rate among the 15-year-olds and younger children fell 2.4 percentage points, i.e. to the level of 17.4%.

The risk of children falling into the risk-of-poverty is related to the household type in which they are brought up. Single-parent households had the highest at-risk-of-poverty rate (44.4%) and the fastest growth in the at-risk-of-poverty rate during the year. Poverty decreased in the households with two adults and one child and remained at the level of the previous year for the households with two adults and two children.

The positive trends in the Estonian economy were least beneficial for the people who did not work. This way, the at-risk-of-poverty rate grew during the year for both the unemployed and the old-age pensioners.

At-risk-of-poverty rate by age groups, 2004–2006

The estimates are calculated according to the data of the Estonian Social Survey conducted by Statistics Estonia since 2004. In 2007, more than 5,000 households participated in the survey. The survey called EU-SILC is carried out by statistical organisations of all European Union Member States on the basis of harmonised methodology. The yearly income data is collected by this survey, thus the 2006 income data is collected in the year 2007. The calculations of poverty and inequality indicators are based on yearly income.

At-risk-of-poverty rate is the share of persons with an equalised yearly disposable income lower than the at-risk-of-poverty threshold. At-risk-of-poverty threshold is 60% of the median equalised yearly disposable income of household members. Equalised disposable income is the total household income, which is divided by a sum of equivalence scales of all household members.