Results of the EU-SILC

31.01.2007

The Central Statistical Bureau joined in 2005 the Community Survey on Income and Living Conditions. The introduction of this survey into all member countries of the European Union (EU) was determined by Regulation EC No. 1177/2003 of the European Parliament and Council (EC) dated 16 June 2003 “On Community Statistics on Income and Living Conditions”(abbreviated EU_SILC) and it concerns the provision of data on income distribution, poverty level and social exclusion. In the course of the first 4 surveys the European institutions cover 2/3 of the survey costs in a member country including Latvia. The survey is taken once a year.

Some EU countries produce their income statistics on the basis of administrative data, whereas aggregated data in all EU member countries are obtained with a rather long delay. Similarly, in Latvia, too, income data are currently published for the year 2004.

So far the household disposable income has been calculated from the Household Budget Survey data. Beginning in 2005 and onwards this income will be obtained from the SILC data.

One of the main objects of investigation of EU-SILC is the annual income of households comprising wages and salaries, income from self-employment, social transfers received, property income and others. Data on income in 2004 were obtained in terms of net income. The CSB interviewers have visited 5.2 thsd households that were selected by means of random sampling.

According to EU-SILC data the household disposable income in cash per household member in Latvia was LVL 100 per month. This is only slightly more than in Lithuania (LVL 98) but considerably less than in Estonia (LVL 140).

There were considerable differences in the household disposable income in cash among the urban and rural residents. In urban households it was as high as LVL 112 per month while in rural households it was LVL 75. Considerably greater differences in the income level can be observed by comparing various regions of the country.

Level of household disposable income per household member
per month in the regions of Latvia in 2004


The lowest level of household disposable income still persists in Latgale where it represented less than ¾ of the country’s average indicator and slightly more than a half (54%) of the household income level of persons residing in the capital city.
More than half of the households (54.5%) in their replies to the question “To what degree does your household manage to make both ends meet?” answered that this could be done with certain difficulties.

Answers to the question “To what degree does your household manage
to make both ends meet?”
(in per cent)


The majority of households believe that their disposable income does not align with the costs of contemporary costs of living.
For income distribution not only the income level itself but also its structure is important. In Latvia wages and salaries (69%) still dominate the structure of household disposable income. This testifies to the great dependence of the household budget on this income item and the comparatively low level of income from other economic activities, including business activity and self-employment.

Structure of disposable cash income in 2004
(LVL, per household member per month)

Latvia

Urban area

Rural area

Disposable income, total

100.20

112.05

75.31

of which:

Income from salaried employment

68.89

79.82

45.95

Income from self-employment

6.70

6.46

7.21

Property income

0.89

1.04

0.58

Transfers received

25.52

26.87

22.69

of which social transfers

23.67

24.57

21.78

Other income

0.04

0.02

0.07

Expenditures diminishing disposable income (with a minus sign)1

-1.84

-2.15

-1.18


In the countryside wages and salaries represented 61% of the disposable income. At the same time income from self-employment in the countryside represented only one third of the income received in the form of social transfers or less than 10% of the total amount of disposable income. Income from self-employment in the countryside will undoubtedly increase due to wider accessibility to EU funding.
The main factors influencing the economic resources of households are the relation between the number of employed and dependents in households. Disposable income in households with a low proportion of employed is also comparatively low. The number of children (aged under 18 years) in the family is a factor that has a substantial impact on its welfare. With the increasing number of children in the family, the disposable income is decreasing. Families with many children (3 or more children) have to face the toughest financial difficulties, as have the single-parent families where one of the parents brings up the children.

Disposable cash income depending on the household structure in 2004

Lats per household member per month

Types of households

One person

113.03

One adult with children

76.18

A couple without children

123.10

A couple with children

96.43

Other households with children

79.19

Households by the number of children:

1 child

114.16

2 children

92.37

3 and more children

53.23

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1
Financial aid to other households, the real estate tax and land tax paid.

2 Quintiles were established for all households arranging them in ascending order by the disposable income per one household member and then dividing it into five equal parts. Each of these represents one fifth or 20% of the households.

An analysis of disposable household income by quintile groups2 shows that 60% (quintiles 1-3) of the poorest households had only 35% of the total amount of the disposable cash income in all households although 61% of the total number of persons lived in these households. Besides, more than 2/3 of the total number of children in households lived in these households.

Income and household members by quintile group in 2004: per cent distribution
(in per cent)

Disposable cash income

Per cent distribution of persons in households

Per cent distribution of children in households

Total

100

100

100

of which by quintile groups of disposable income:

1st (lowest) quintile

8,1

23,7

35,8

2nd quintile

11,6

18,1

16,8

3rd quintile

15,7

19,4

16,7

4th quintile

24,0

21,1

20,4

5th (highest) quintile

40,6

17,7

10,3

Inequality in income distribution is characterised in statistics by Gini coefficient3. In 2004, Gini coefficient in this country was 34% and it is higher than the average in the EU member states (29%). In 2004, it was higher (35%) only in Great Britain, Greece and Estonia. Under the conditions of rapid economic growth it might remain on the previously mentioned level. It is important therefore that incomes should grow rapidly not only in the highest income groups but the rise in the high living costs should be likewise compensated with an adequate rise in incomes to those whose incomes depend on the pensions or benefits received.

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3
It varies from 0 to 100%. It is zero if there is an absolute equality in the distribution of income or consumption resources but equals 100% in a situation contrary to that.

Prepared by the Social Statistics Department
Tālr. 7 366 908
Edmunds Vaskis