Household disposable income reached the pre-crisis level in 2013

20.01.2015

Data of the Central Statistical Bureau of Latvia (CSB) show that compared to 2012 household disposable income1 in 2013 increased by 10.6%, and accounted for EUR 354 per household member monthly, thus reaching the income level of 2008.

Household disposable income in Latvia 2008 - 2013
(EUR per household member monthly)

Data source: Central Statistical Bureau of Latvia

Household income from labour rose by 12.5% from the average of EUR 216 per household member monthly in 2012 to EUR 243 in 2013. In turn, the amount of social transfers2 grew slower - by 5.7% per household member monthly (from EUR 88 in 2012 to EUR 93 in 2013).

The share of social transfers - pensions, benefits and other budget payments – in total household disposable income keeps decreasing. Over the previous three year this share has declined by 6 percentage points from 32.4% in 2010 to 26.2% in 2013.

With the increasing activity in the labour market the share of household income from labour increased from 63.7% in 2010 to 68.8% in 2013.

However, the pre-crisis level when income from labour accounted for 75.5% of total disposable income, while income from social transfers – for only 20.0% is still not reached.

Structure of household disposable income 2008 - 2013
(in per cent)

Data source: Central Statistical Bureau of Latvia

Compared to 2012 all household groups witnessed a comparatively steady income growth in 2013. The most rapid income growth was observed in the poorest (1st quintile) households (11.6%), as well as in the richest (5th quintile) households (11.2%).

Household disposable income by quintile group in 2008 - 2013
(EUR per household member monthly)

Quintile group3

2008

2009

2010

2011

2012

2013

Income growth

2013 over 2012, %

1st (poorest)

112

100

97

104

112

125

11.6%

2nd

201

202

194

199

209

228

9.1%

3rd

281

259

257

260

272

295

8.5%

4th

411

355

338

352

372

413

11.0%

5th (richest)

797

668

620

681

701

780

11.3%

Despite the fact that in 2013 household disposable income reached the level of 2008, it should be noted that in 2013 income between households in Latvia was distributed more evenly than in 2008. This is evidenced significantly lower income inequality indicators - Gini coefficient4 and quintile share ratio (S80/S20)5 - in 2013 as compared to 2008. In turn, compared to 2012 a slight increase in inequality indicators can be observed.

Income inequality indicators in 2008, 2012 and 2013

Indicator

2008

2012

2013

Quintile share ratio (S80/S20)

7.4

6.3

6.5

Gini coefficient

37.5

35.2

35.5

Compared to other European Union Member States6 income inequality level is still high in Latvia. In 2013 the Latvian Gini coefficient (35.5%) was the highest in the European Union. This indicator was slightly lower in Bulgaria (35.4%), Lithuania (34.6%), and Greece (34.4%). Also quintile share ratio (S80/S20) was among the highest in the European Union (in Bulgaria, Greece, Romania - 6.6, in Latvia - 6.5, in Spain - 6.3).

Source for household disposable income data is the survey on income and living conditions conducted by the CSB in 2014 (EU-SILC – EU Statistics on Income and Living Conditions). Within the framework of the survey 6.1 thsd households and 12 thsd persons aged 16 and over were interviewed. Data on household income in 2014 will be compiled in a similar survey which will take place from March till the end of June. 

More information on 2014 survey data is available in the CSB database.

More information:
Viktors Veretjanovs
Social Statistics Department
Income and Living Conditions Statistics Section
Tel 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 under the age of 16, income from property rental, receipts from tax adjustments from the 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.

3 Quintile group is one fifth (20%) of the number of the surveyed households, which are grouped in a growing sequence by 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 level.

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

5 Quintile share ratio (S80/S20) is a 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).

Eurostat data for the last year available, i.e. for the survey year 2013, when in Latvia income data were collected for 2012. Data are available in Eurostat database: Quintile share ratio, Gini coefficient.