During the year, household disposable income have grown by 5.3%, reaching EUR 321 per month in 2012

23.01.2014

Analysis of EU Statistics on Income and Living Conditions (EU-SILC) survey results compiled by the Central Statistical Bureau of Latvia (CSB) shows that, in 2012, household disposable income* at current prices increased by 5.3% and reached EUR 321 (LVL 225) per household member monthly, as compared to EUR 304 (LVL 214) in 2011. Income rise at constant prices (considering inflation) accounted for 3%.

In 2012, household disposable income still stay behind the indicators registered during the pre-crisis years, however they reach 90% of the household disposable income of 2008.

Household disposable income in Latvia; 2004–2012

(EUR per household member monthly)

Data source: Central Statistical Bureau of Latvia

Income data of 2004–2011 have been recalculated using population number estimated in the Population and Hosing Census.

In 2012, due to higher increase of employment, household disposable income in rural areas grew slightly faster than in urban regions – by 5.7% and 5.2%, respectively. The most notable increase in household disposable was recorded in Riga (8.7%), while the lowest in Pieriga (1.7%). Income rise in other regions varied between 3% and 5%: 4.6% in Vidzeme, 4.1% in Kurzeme, 3.9% in Latgale and 3.4% in Zemgale.

Household disposable income in statistical regions, urban and rural areas of Latvia; 2011 and 2012

(EUR per household member monthly)

Data source: Central Statistical Bureau of Latvia

Changes in household disposable income taking place during the recent years indicate that income gap among the country regions has increased. In 2012, income in Riga households reached 121% of Latvia average, in Pieriga – 105% and in Kurzeme – 96%. Whereas in Zemgale, Vidzeme and Latgale regions household disposable income notably lag behind the country average and comprised 87%, 81% and 75%, respectively.

Income rise in 2012 mainly was affected by the increase in wages and salaries. Income from labour per household member on average have risen by 7.9%. However, it still is lower than prior, since in 2012 reached just 81% of the level in 2008 (EUR 216 and EUR 268 or LVL 152 and LVL 189, respectively).

Household disposable income almost was not influenced by changes in social transfers**, because in 2012 the amount thereof rose only by 0.1%, as compared to 2011. Social transfers in the poorest households have grown by 2.0%, while income from labour – by 11%. It may mean that, along with higher economic activity in the country as a whole, also poorest residents were able to find job.

Household disposable income by quintile group; 2011 and 2012
(on average per household member monthly)

Quintiles***

2011

(EUR)

2011

(LVL)

2012

(EUR)

2012

(LVL)

Growth rate, %

1st (poorest)

104

73

112

79

107.2

2nd

199

140

209

147

104.9

3rd

260

183

272

191

104.8

4th

352

247

373

262

106.1

5th (richest)

681

479

705

495

103.5

A positive fact to be noted is rise in the income from labour in all quintile groups (except 2nd), thus social transfer contribution has reduced; moreover, in the 3rd quintile (middle) this trend is more explicit than in other income groups.

In comparison with 2011, incom e inequality indicators – Gini coefficient**** and quintile share ratio (S80/S20)***** – in 2012 have improved slightly. Gini coefficient has declined from 35.7% to 35.3%, however it still is the highest in EU****** (similar indicators were recorded in Spain (35.0%), Portugal (34.5%), and Greece (34.3%), while in Lithuania it comprised 32.5% and in Estonia – 32.0%). Quintile share ratio, in turn, has dropped from 6.5 to 6.4. However it also is one of the highest in EU, e.g., the indicator accounts for 5.4 in Estonia and for 5.3 in Lithuania.

Income inequality indicators; 2011–2012

Indicator

2011

2012

Quintile share ratio (S80/S20)

6.5

6.4

Gini coefficient (%)

35.7

35.3

Data on household disposable income are acquired from EU Statistics on Income and Living Conditions (EU-SILC) 2013 survey conducted by the CSB. Within the framework of the survey, 6.3 thousand households were surveyed and 12 thousand persons aged 16 or over were interviewed. Income data on 2013 will be compiled in similar survey also this year. It will take place from March till the end of June.

More information on data of survey 2013 is available in CSB database.

 

More information:
Viktors Veretjanovs
Social Statistics Department
Income and Living Conditions Statistics Section
Tel. +371 67366609

 

Methodological explanations

* Disposable income is cash income from labour, employee income in kind received by using company car for private needs estimated in cash, income or losses received from self-employment, received pensions and benefits, regular material assistance from other households, profit from interests of deposits, dividends, shares, income received by children aged under 16, income from property rental, receipts for tax adjustments from State Revenue Service (for business activities, eligible costs – education, medical treatment etc.).

**Social transfers are pensions and benefits paid by the State or municipality, child maintenance payments, scholarships, social insurance benefits and compensations, including the ones paid by other countries.

***Quintile is one fifth (20%) of the number of surveyed households grouped in increasing sequence according to the disposable income per one household member. The lowest (first) quintile includes one fifth of the households with the lowest income, while the highest (fifth) – one fifth of the households with the highest income.

****Quintile share ratio (S80/S20) is ratio of total equivalised disposable income received by the 20% of the country’s population with the highest equivalised disposable income (top quintile) to that received by the 20% of the country’s population with the lowest equivalised disposable income (bottom quintile).

*****Gini coefficient characterises inequality of income. It varies from 0 to 100. Gini coefficient is 0, if there is absolute equality of income (i.e., all population has the same income), but the closer it gets to 100, the greater is inequality of income.

******Hereinafter international data from Eurostat database (http://epp.eurostat.ec.europa.eu/portal/page/portal/income_social_inclusion_living_conditions/data/database) on the last year available, i.e., on survey year 2012, when in Latvia case income data on 2011 were compiled.