Economic recession did not influence poverty rates in 2008

Posted on 28 June 2010, 11:00

According to Statistics Estonia, in 2008 the growth of wages and salaries slowed down but the increased pensions and governmental benefits helped to maintain incomes. Therefore the relative poverty remained on the level of 2007.

In 2008, 19.7% of the Estonian population lived in relative poverty, which is approximately as much as in 2007 when the rate was 19.5%. Social transfers (governmental benefits and pensions) helped to maintain incomes, as they were not included in income the relative poverty rate was even 37.5% in 2008, (in 2007 — 36.3%)

In 2008, a person was considered to be in at-risk-of-poverty if his/her monthly equalised disposable income was below 4,858 kroons. The at-risk-of-poverty threshold rose by 518 kroons compared to the previous year. Also in 2008 the difference in income between the poorest and richest fifth of the population stayed fivefold.

The elderly is rather the age group that still lives in poverty. In 2008, every third person aged 65 and older and 14% of persons aged 25–49 lived in relative poverty. Compared to previous years it can be noticed that the number of younger people living in relative poverty is increasing, and the number of persons aged 65 and older living in poverty is decreasing.  The main reason is more stable income of persons in pension age compared with other age groups.

By type of household the at-risk-of-poverty rate has increased the most during the year 7 percentage points in households with three and more children, and has decreased 8 percentage points in households with a single person aged 65 and over. In other households there were not so large variations in the at-risk-of-poverty rate.

Falling into the risk-of-poverty is related to the education level. In 2008, the at-risk-of-poverty rate of persons with basic or lower education (below upper secondary education) was 34%, which was more than four times higher than of persons with higher education (tertiary education) (8%).In recent years the trend shows that the relative poverty rate of less educated persons is increasing, while that of the persons with higher education is decreasing. Thus, a good education is an important presumption for the prevention of poverty.

At-risk-of-poverty rate of people aged 18 or over by educational level, 2005–2008

Diagram: At-risk-of-poverty rate of people aged 18 or over by educational level, 2005–2008

The estimations are based on the social survey, which has been conducted by Statistics Estonia since 2004. In 2009, over 4,900 households participated in the survey. The survey collects data about yearly income, which is the reason why the survey of 2009 asks for data about income in 2008. The yearly income is necessary for calculating the indicators of poverty and inequality. Social surveys are conducted on the basis of harmonised methodology in all the European Union countries under the title of EU-SILC.
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 the sum of equivalence scales of all household members.

Below upper secondary education — basic or lower education

Upper secondary education — professional secondary education after basic education, vocational education together with upper secondary education, professional secondary education after basic education, general secondary education or professional secondary education after secondary education.

Tertiary education — professional secondary education after secondary education, professional higher education, applied higher education, professional higher education, diploma study, bachelor’s, master’s or doctoral degree.