Each fifth person in Latvia is at-risk-of-poverty

04.02.2014

In 2012, 703 thousand persons or 35.2% of total number in Latvia were at-risk-of-poverty or social exclusion1. It is less by 28 thousand than a year ago2 when this indicator was 731 thousand or 36.2%. The decrease was affected by the improvement of economic situation and increase of population's disposable income3 by 5.3%, which in its turn promoted reduction of the number of persons facing severe material deprivation by 1.5 percentage points, according to the data of Central Statistical Bureau (CSB).

In 2012, 19.4% of Latvian population were at-risk-of-poverty. As population income increased, at-risk-of-poverty threshold4 has grown reaching 233 euros (or 164 lats) per month in 2012.

At-risk-of-poverty reduced to those individuals whose disposable income rose more rapidly than at-risk-of-poverty threshold. But those individuals that receive such social transfers as pensions and benefits, child maintenance payments, scholarships, social insurance benefits and compensations, etc. got closer or even beneath the threshold. For example, average amount of old age pension paid to pensioners' households in 2012, compared to 2011, rose only by 1.2%, while at-risk-of-poverty threshold rose by 4.8%.

At-risk-of-poverty rate5 in different population age groups in 2008-2012
(per cent)

 

2008

2009

2010

2011

2012

Of all population

26.4

20.9

19.0

19.2

19.4

of which by age groups (years):

 

 

 

 

 

0–17 yrs.

26.3

26.3

24.7

24.4

23.4

18–64 yrs.

20.5

20.4

20.2

19.3

18.8

65+ yrs.

47.6

17.2

9.1

13.9

17.7

Evaluating by age groups, mostly – 3.8 percentage points – at-risk-of-poverty rate increased in age group 65 and more years. In 2011 it was 13.9%, in 2012 – 17.7%. Already for the third year in row number of children at-risk-of-poverty until 17 years (including) is reducing. In 2012, compared to the previous year, it has dropped by one percentage point to 23.4%, but in 2009 this indicator comprised 26.3%.

In 2012 still at the highest risk of poverty were households with dependent children and single parent (38.3%), as well as households with 3 or more children and both parents (33.2%). However, compared to the previous year, at-risk-of-poverty in such households has decreased by 3.2 and 2.7 percentage points (in 2011 41.5% and 35.9%, respectively).

At-risk-of-poverty rate in different population socio-economic groups in 2004-2012

(per cent of all population in respective socio-economic group)

Data source: Central Statistical Bureau of Latvia

Evaluating by socio-economic groups, in 2012 at-risk-of-poverty rate most rapidly has increased for unemployed (55.8%, compared to 51.9% in 2011) and for pensioners (18.8%, compared to 15.8% in 2011). It can be explained by the fact that amount of social transfers in 2012, compared to 2011, has remained almost unchanged (only 0.1% increase per one household member), but income from labour has risen by 7.9% per one household member.

Data of CSB shows that at-risk-of-poverty rate depends on the level of education attained by the population. For example, in age group from 18 to 64 years (including) at-risk-of-poverty in 2012 for population with higher education was 6.4%, for population with secondary education - 19.7%, but for population with basic school or lower education - 33.3%. Similar trends were also observed in previous years.

At-risk-of-poverty rate in 2012 in different population age groups depending on level of education attained

(per cent of all population with respective education)

Data source: Central Statistical Bureau of Latvia

Data source of the obtained relative poverty and social exclusion indicators is EU-SILC – EU Statistics on Income and Living Conditions 2013 survey carried out by the CSB.

In this survey 6.3 thousand households were surveyed and 12 thousand respondents aged 16 years and more were interviewed. Data on income were compiled on 2012. Income data of 2013 will be compiled in EU-SILC 2014 survey, which will be launched in March of this year and will last till the end of June.

Unlike CSB, Statistical Office of the European Communities Eurostat publishes monetary data on poverty and social exclusion with reference to year when the survey is carried out, although income are compiled on the previous calendar year. On 5 December 2013 Eurostat published EU-SILC 2012 survey data on poverty and social exclusion which basically in Latvia's case are income data on 2011.

More information on the results and methodology of EU-SILC survey is available in CSB databases.

 

Prepared by Viktors Veretjanovs
Income and Living Conditions Statistics Section
Tel. +371 67366609

 

Methodological explanations

Persons with income less than at-risk-of-poverty threshold; or explicitly materially deprived; or employed at work with low intensity are subjected to at risk of poverty or social exclusion. It is considered that a person is facing severe material deprivation if he/she cannot afford at least four items among the 9 following: i) to pay for arrears (mortgage or rent, utility bills or hire purchase instalments), ii) to keep home adequately warm, iii) to face unexpected expenses, iv) a meal with meat, chicken or fish every second day, v) one week annual holiday away from home, vi) a personal car, vii) a washing machine, viii) a colour TV, xi) a telephone. The work intensity of the household refers to the number of months that all working age household members have been working during the income reference year as a proportion of the total number of months that could theoretically be worked within the household.  Individuals are classified into work intensity categories that range from WI=0 (jobless household) to WI=1 (full work intensity). It is considered that person is living in household with low work intensity if WI ≤ 0.2.

Here and further survey data of 2005-2012 (income data of 2004-2011) are recalculated, using evaluation of population number obtained in Population and Housing Census.

Disposable income - 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.).

4 At-risk-of-poverty threshold is 60% of disposable income median recalculated per equivalent consumer. Median is international indicator which characterizes grouped observation centre value (midpoint of division) from lowest to highest value.

5 At-risk-of-poverty rate - share of persons with an equivalised disposable income below at-risk-of-poverty threshold. Equivalised disposable income - household disposable income, which is calculated per equivalised consumer. It is obtained by dividing household income by equivalised household size which is made using the modified OECD equivalence scale (1.0; 0.5; 0.3). This scale gives a weight of 1.0 to the first adult, 0.5 to any other household member aged 14 and over and 0.3 to each child aged less than 14.