Analytics, Estonia, EU – Baltic States, Financial Services, Society

In 2016, the income of the population increased and income inequality remained on the level of the previous year. Social transfers (state benefits and pensions) helped to prevent falling into poverty, as had they not been included in income, 39.2% of the population would have lived in relative poverty.

The percentage of people living in relative poverty has been declining for the past four years, having gone from 21.8% in 2013 to 21.1% in 2016.   

In 2016, a person was considered to be living in relative poverty if his/her equalised monthly disposable income was below 468 euros (432 euros in 2015). In 2016, the income of the poorest and the richest quintile of the population differed 5.8 times.

Compared to 2015, the relative poverty rate has decreased in the case of children, young and middle aged people, but has increased in the case of the elderly. In 2016, 41.8% of persons aged 65 and over lived in relative poverty (40.2% in 2015). In 2016, 16.5% of children under 18 lived in relative poverty, i.e. 2 percentage points less than a year earlier.

A higher level of education is an important prerequisite for the prevention of poverty. In 2016, the relative poverty rate of persons with higher education was 13%, of persons with basic education or lower 36.7%. In the case of persons with higher education, the relative poverty rate was almost three times lower than in the case of persons with basic education or lower.

Relative poverty rate is the share of persons with equalised yearly disposable income lower than the relative poverty threshold. The relative 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.

The estimations are based on the Estonian Social Survey, which has been conducted by Statistics Estonia since 2004. 6,200 households, which included 15,300 household members, participated in the survey in 2017. The survey collects data about the yearly income, which is why the survey of 2017 asked about the income of 2016. The yearly income is necessary for calculating the indicators of poverty and inequality. The social survey is conducted by statistical organisations in all European Union countries on the basis of a harmonised methodology by the name of EU-SILC. For the statistical activity “Estonian Social Survey”, the main representative of public interest is the Ministry of Social Affairs.