Number of people living in absolute poverty rose by two and a half times
According to Statistics Estonia, 22.5% of Estonia’s population lived at risk of poverty and 3.5% in absolute poverty in 2022. Compared with 2021, the share of people living at risk of poverty decreased by 0.3 percentage points and the share of people living in absolute poverty increased by 2.1 percentage points.
Epp Remmelg, leading analyst at Statistics Estonia, says that the at-risk-of-poverty rate reflects income inequality in a country. “Close to 303,900 people lived at risk of poverty in 2022, which is nearly 3,000 persons more than in 2021. Their net monthly income, taking into account household composition, was less than 756 euros,” said Remmelg.
Over the years, the at-risk-of-poverty rate has been highest among the elderly living alone. “In 2022, however, the at-risk-of-poverty rate increased the most among families with children, particularly those with three or more children. This is up by 4.6 percentage points from 2021,” the analyst explained, adding that of people aged 65 and over living alone, 79.1% were at risk of poverty, down by 2.6 percentage points from the year before.
34.8% of lone parents and 18.6% of families with three or more children were at risk of poverty. “Payments from the second pension pillar in 2021, which raised average incomes and reduced the at-risk-of-poverty rate among children and working-age households, can be seen as a major contributor,” Remmelg pointed out. She added that the increase in income in 2022 was smaller than in the previous year and the at-risk-of-poverty rate rose mainly in those types of households to which the most pension pillar payments were made in the previous period.
The at-risk-of-poverty rate was highest in Lääne (34.3%), Viljandi (34.3%), and Lääne-Viru (33.0%) counties, and lowest again in Harju (17.6%), Järva (19.1%), and Tartu (20.5%) counties. The at-risk-of-poverty rate increased the most in Lääne-Viru (10.3 percentage points), Lääne (6.5 percentage points), and Viljandi (4.4 percentage points) counties. The biggest drop was recorded in Võru (8.5 percentage points), Hiiu (6.3 percentage points), and Ida-Viru (5.2 percentage points) counties.
Increase in absolute poverty is caused by high price rises
Absolute poverty indicates the share of the population who are not able to meet their basic needs. “In 2022, nearly 48,000 people lived in absolute poverty, whereas 18,000 people did so in 2021, which means the number has risen by two and a half times. Their net monthly income, taking into account household composition, was less than 303 euros,” noted Remmelg.
“The rise in the number of people living in absolute poverty is due to the large price increase in 2022, which raised the subsistence minimum more than ever before: by 30%, from 234 to 303 euros. However, incomes, including different types of benefits, did not increase to the same extent in 2022,” the analyst explained, adding that benefits have a significant impact on how people on lower incomes cope financially.
The absolute poverty rate rose the most among the inactive, and slightly less among the employed. In 2022, more than one in five unemployed people lived in absolute poverty. For the first time in a long time, retired persons also fell into absolute poverty, as the national pension of 275 euros in 2022 was lower than the subsistence minimum.
“By age group, the absolute poverty rate in 2022 again increased the most among 18–24-year-olds. This means that one in ten young people lived in absolute poverty last year. More than one in ten lone parent households also lived in absolute poverty,” Remmelg added.
In 2023, the share of people living in deprivation, i.e. people who cannot afford various items commonly available in the society, was 1% lower than in the previous year – 6.2% of the population, or nearly 84,000 people. “Deprivation affects persons aged 65 and over the most (8.4%), while the least deprived are 16–24-year-olds (3.5%). The largest decrease in deprivation was seen among single people under 65, and the biggest increase was recorded among lone parents,” the analyst said.
The estimations are based on the data of the 2023 Estonian Social Survey. The main representative of public interest for this statistical activity is the Ministry of Social Affairs. 5,564 households participated in the survey. The survey collects data about yearly income, which is why the 2023 survey asked respondents about the income in 2022. The yearly income is necessary for calculating the indicators of poverty and inequality. The social survey (called EU-SILC) is conducted in all European Union countries on the basis of a harmonised methodology.
At-risk-of-poverty rate is the share of persons with an equivalised yearly disposable income lower than the at-risk-of-poverty threshold. The at-risk-of-poverty threshold is 60% of the median equivalised yearly disposable income of household members. Equivalised disposable income is the total household income divided by the sum of equivalence scales of all household members.
Deprivation rate is the share of persons who cannot afford at least 5 of the 13 items: 1) to pay rent or utility bills, 2) to keep their home adequately warm, 3) to face unexpected expenses, 4) to eat meat, fish or a protein equivalent every second day, 5) a one-week holiday away from home, 6) a car, 7) to replace furniture when worn out or damaged, 8) to replace worn-out clothes with new ones, 9) to have at least two pairs of outdoor shoes in good condition that are necessary in our climate, 10) to spend a small amount of money each week on oneself, 11) to participate regularly in a leisure activity that costs money, 12) to get together with friends or family for a drink or meal at least once a month, or 13) to have an internet connection at home for personal use when needed.
More information about the methodology used to measure deprivation can be found here.
More detailed data have been published in the statistical database.
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