Gertrud Levit
gertrud.levit @ aripaev.ee
The level of relative poverty in Estonia is 19.5 pct according to the data of Statistics Estonia in 2006, but in a number of developed countries the level of relative poverty is even higher, aripaev.ee quotes Russian business newspaper Delovõje Vedomosti.
There are two types of poverty – relative poverty, determined by comparing the incomes of households with the medium level of society, and absolute poverty, determined by comparing the income level of households to standards set for the state (and year) by experts.
Relative poverty is determined like this: 6000 people are questioned and their equivalent net income during a certain period of time is learned (for example, provider is 1; another adult family member is 0.5, children 0.3).
All incomes are listed from lowest to highest and the medium is found. Then 60 pct of that medium is calculated, and the result is the limit of poverty. People whose income is below that limit live in relative poverty.
Despite the fact that the indicator of poverty increased a bit in Estonia when compared to the previous year, we aren’t much different from the medium of Europe. According to the data of Eurostat, in 2006 the level of relative poverty in EU’s 25 member states was 16 pct. At the same level with Estonia – 19 pct – were the United Kingdom, Poland, and Rumania. In Italy, Lithuania, and Spain 20 pct of people lived in relative poverty, in Greece 21 pct, in Latvia 23 pct. The situation is best in Czech, Netherlands, and Iceland, where the rate of relative poverty is 10 pct.
According to OECD’s report for 2006, the rate of relative poverty in USA and Japan is also low, appropriately 13.7 pct and 13.5 pct. According to OECD, it’s caused by fixed-term contracts and low wages.
Risk groups in Estonia
There are a number of risk factors that might take people below the limit of poverty
1. Being active on labour market. In a family, where the head of the family (provider) isn’t employed and isn’t retired, the risk factor of poverty is over 50 pct.
2. Retiring increases the risk of poverty by 12-20 pct.
3. Living in small towns or in the country increases the risk of poverty by 6-8 pct.
4. Lacking secondary education increases the risk by 17 pct, the risk for people with higher education is 5 pct.
5. After 2002, the risk increased by 5 pct for those who don’t speak Estonian.
6. Lately a risk factor started considering whether the provider is male or woman: when the head of the family is a 20-40 years old woman, often a single mother, the risk of poverty increases by 20 pct. If the head of the family is male, the risk falls below 10 pct.
7. The number of children in the family plays a role. If there are 3 or more children in the family, the risk of poverty increases by 20.5 pct.
None of the risks exists separately, they’re all connected: employment depends on education and language skills, which depend on living location. The age and gender of the provider play a role when calculating risks, because the number of family members and children depends on it.
Source: 2000-2004 report from the Ministry of Social Affairs.
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