A fifth of the residents of Estonia live in relative poverty

In 2007, a person was considered to be at-risk-of-poverty if his/her monthly equalised disposable income was below 4,340 kroons. The at-risk-of-poverty threshold rose by 860 kroons compared to 2006. The share of persons living in relative poverty did not change significantly compared to the previous year, but the difference in income between the poorest and richest fifth of the population decreased by 0.5 percentage points. The difference in income between the poorest and richest fifth of the population was fivefold. In Europe the income distribution was more unequal than in Estonia in Latvia, Lithuania, Poland, United Kingdom, Portugal and Greece. The inequality level was similar to Estonia’s in Italy, Spain and Germany.

In 2007, incomes grew for the entire population. Incomes increased most in the smallest and medium income quintiles — in the first, second and third — by about a quarter. In the fifth income quintile that comprises of richer people income increased by 13%. The distribution of income in society remained at about the same level as in previous years — there was no significant mobility between the quintiles irrespective of occupation, age and gender. The richest households in Estonia are households without children where all members are working (their at-risk-of-poverty rate is 4%) and the poorest are households with children where nobody works. In the latter the at-risk-of-poverty rate increased by three percentage points during the year and rose to 87% in 2007.

Due to the decrease in the differences of incomes, income inequality slightly lessened between Estonians and non-Estonians and the urban and rural population. Ethnic Estonian citizens’ income increased on average 17% over the year, while the income of non-Estonians with other or unspecified citizenship grew by about a fourth. Similarly, the income of the urban population grew by 17% and that of the rural population by about a fourth.

Population by income quintile and place of residence, 2007

Northern Estonia — Harju county, incl.Tallinn;
Central Estonia — Järva, Lääne-Viru and Rapla counties;
Northeastern Estonia — Ida-Viru county;
Western Estonia — Hiiu, Lääne, Pärnu and Saare counties;
Southern Estonia — Jõgeva, Põlva, Tartu, Valga, Viljandi and Võru counties.

In Northern Estonia the concentration of richer people among the overall population was the highest — 55% of Northern Estonians belonged to the fourth or fifth income quintiles. In Northeastern Estonia (Ida-Viru county) most people were poor — nearly 60% of people belonged to the first or second income quintiles. Central, Western and Southern Estonians had a comparatively even income distribution. The ratio of rich and poor people tends to be more equal in the cities, in the countryside the poor are a larger majority.

Although relative poverty did not decrease in spite of economic growth, people’s subjective appraisals of their health, living conditions and accessibility of health care improved in 2008. An increase of a few-percentages in the share of positive appraisals did not depend on the population’s income group, place of residence or occupation.

The estimations are based on the social survey, which has been conducted by Statistics Estonia since 2004. In 2008, over 4,700 households participated in the survey. The survey collects data about yearly income, which is the reason why the survey of 2008 asks for data about incomes in 2007. 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 European Union countries by the name 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 a sum of equivalence scales of all household members.