On poverty and social exclusion indicators

28.01.2010

Provisional data on 2008 from the Community Survey on Income and Living Conditions (EU-SILC) carried out by the Central Statistical Bureau show that in Latvia during the last years the at-risk-of-poverty rate, i.e., the share of persons income of which are under at-risk-of-poverty threshold, has increased and it still remains high. At-risk-of-poverty rate in 2008 remained at the level of 2007 – 26%. It means that slightly more than 500 thousand or ¼ of the Latvia population were subjected to the poverty risk.

 

At-risk-of-poverty rate in 2004 – 2008
(per cent)

 

In 2008 at-risk-of-poverty rate was the highest (80%) among the population aged 65 and over living alone. According to the data of 2007 poverty risk of these persons exceeded the average indicators of the European Union (EU) 2.7 times and was the highest among the Member States. Next group subjected to high at-risk-of-poverty rate are unemployed. Moreover, their at-risk-of-poverty rate in 2008 has grown by 3 percentage points.

At-risk-of-poverty rate among various population groups in 2004 – 2008
(per cent)

 

Distribution of at-risk-of poverty rate varies among various regions of Latvia. It was the highest in Latgale followed by Vidzeme and Kurzeme. Noticeably lower at-risk-of poverty rate was observed in Riga and Pieriga. But in Zemgale it corresponds to the average indicator of Latvia.

At-risk-of-poverty rate in regions of Latvia in 2008
(per cent)

 

Compared to the previous year, the data of 2008 show that the reduction of economic activity level and growth of unemployment have influenced mainly young people. At-risk-of-poverty rate of persons aged 18-24 rose by 2 percentage points and reached 19%, and in the corresponding age group it is the highest indicator during the last 5 years. Also at-risk-of-poverty rate of children has increased by one percentage point and reached 26%.
To calculate the at-risk-of-poverty rate the information on population income is acquired from the data of EU-SILC survey, and at-risk-of-poverty threshold is calculated. Rapid growth of disposable income during the period before the economic crisis increased the at-risk-of-poverty threshold noticeably, but according to the survey data the rate of its rise in 2008 has reduced.

Dynamics of disposable income and at-risk-of-poverty threshold

2004

2005

2006

2007

2008

Mean equivalised disposable income , LVL per year

1 818

2 249

2 845

4 160

4 283

At-risk-of-poverty threshold of single person household, LVL per year

880

1 058

1 400

2 030

2 295

At-risk-of-poverty threshold as per cent of previous year

x

120

132

145

113

 

Households income growth of which dropped behind the general rate of income increase (households noticeably dependant on state social benefits and pensions) were significantly subjected to poverty risk.

Data of EU-SILC on 2008 show that at-risk-of-poverty gap[1] has a trend to grow, because disposable income (after taxes) of persons influenced by the poverty risk actually were on average 29% under the statistical at-risk-of-poverty threshold, and this proportion retained the level of 2007 (in 2006 it comprised 25%).

New comparable data of the EU-SILC survey on EU Member States are available on year 2007. In European Union generally Latvia is characteristic with the highest at-risk-of-poverty rate. In the meantime at-risk-of-poverty threshold in Latvia is the seventh lowest and it exceeds this indicator not only in Rumania and Bulgaria, but also in Poland, Lithuania, Hungary and Slovakia.

 

Prepared by Social Statistics Department
Edmunds Vaskis
Tel. 67366908


[1] Full name relative median at-risk-of-poverty gap.


Methodological explanations

Disposable income is cash income from labour work, non-cash employee income, income or losses received from self-employment, received pensions and benefits, regular material assistance received from other households, profit from interests of deposits, dividends and shares, income received by children under age of 16 years income from property rental, tax return from State Revenue Service (for business activities, eligible costs – education medical treatment etc.). Of this total income real estate tax, amount of money regularly given to other households, amount paid to State Revenue Service due to unpaid or insufficiently paid income tax is deducted.

Equivalised disposable income is statistical indicator aim of which is to compare the average income of households of various sizes and compositions.It is calculated by dividing total disposable income of the household with its equivalent size, which is calculated with the use of modified OECD (Organisation of Economic Co-operation and Development) equivalence scale. 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. Respectively, the number of equivalent consumers for household consisting of 3 persons, where there are two adults and one child aged under 14, will be 1+0.5+0.3=1.8.

Median of a finite list of numbers can be found by arranging all the observations from lowest value to highest value and picking the middle one.

At-risk-of poverty threshold is set at 60% of the national median equivalent disposable income.

At-risk-of-poverty rate is a share of persons with an equivalent disposable income below 60% of the national median of equivalent disposable income.

Relative median at-risk-of-poverty gap is a difference between the at-risk-of-poverty threshold and median equivalised disposable income of persons below the same threshold, expressed as a percentage of the at-risk-of-poverty threshold.