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Estonia: Number of people living in absolute poverty rises 2.5 times on year in 2022

According to Statistics Estonia, 22.5 percent of Estonia’s population lived at risk of poverty and 3.5 percent in absolute poverty in 2022 and compared with 2021, the share of people living at risk of poverty decreased by 0.3 percentage points and the share of people living in absolute poverty increased by 2.1 percentage points.

Epp Remmelg, leading analyst at Statistics Estonia, says that the at-risk-of-poverty rate reflects income inequality in a country.

“Close to 303,900 people lived at risk of poverty in 2022, which is nearly 3,000 persons more than in 2021. Their net monthly income, taking into account household composition, was less than 756 euros,” said Remmelg.

Over the years, the at-risk-of-poverty rate has been highest among the elderly living alone.

“In 2022, however, the at-risk-of-poverty rate increased the most among families with children, particularly those with three or more children. This is up by 4.6 percentage points from 2021,” the analyst explained, adding that of people aged 65 and over living alone, 79.1 percent were at risk of poverty, down by 2.6 percentage points from the year before.

34.8 percent of lone parents and 18.6 percent of families with three or more children were at risk of poverty.

“Payments from the second pension pillar in 2021, which raised average incomes and reduced the at-risk-of-poverty rate among children and working-age households, can be seen as a major contributor,” Remmelg pointed out. She added that the increase in income in 2022 was smaller than in the previous year and the at-risk-of-poverty rate rose mainly in those types of households to which the most pension pillar payments were made in the previous period.

The at-risk-of-poverty rate was highest in Laane, 34.3 percent, Viljandi, 34.3 percent, and West-Viru, 33 percent, counties, and lowest again in Harju, 17.6 percent, Jarva, 19.1 percent, and Tartu 20.5 percent, counties. The at-risk-of-poverty rate increased the most in West-Viru, by 10.3 percentage points, Laane, 6.5 percentage points, and Viljandi, 4.4 percentage points, counties. The biggest drop was recorded in Voru, 8.5 percentage points, Hiiu, 6.3 percentage points, and East-Viru, 5.2 percentage points, counties.

Absolute poverty indicates the share of the population who are not able to meet their basic needs.

“In 2022, nearly 48,000 people lived in absolute poverty, whereas 18,000 people did so in 2021, which means the number has risen by two and a half times. Their net monthly income, taking into account household composition, was less than 303 euros,” noted Remmelg.

“The rise in the number of people living in absolute poverty is due to the large price increase in 2022, which raised the subsistence minimum more than ever before — by 30 percent, from 234 to 303 euros. However, incomes, including different types of benefits, did not increase to the same extent in 2022,” the analyst explained, adding that benefits have a significant impact on how people on lower incomes cope financially.

The absolute poverty rate rose the most among the inactive, and slightly less among the employed. In 2022, more than one in five unemployed people lived in absolute poverty. For the first time in a long time, retired persons also fell into absolute poverty, as the national pension of 275 euros in 2022 was lower than the subsistence minimum.

“By age group, the absolute poverty rate in 2022 again increased the most among 18–24-year-olds. This means that one in ten young people lived in absolute poverty last year. More than one in ten lone parent households also lived in absolute poverty,” Remmelg added.

In 2023, the share of people living in deprivation, or people who cannot afford various items commonly available in the society, was 1 percent lower than in the previous year — 6.2 percent of the population, or nearly 84,000 people.

“Deprivation affects persons aged 65 and over the most, 8.4 percent, while the least deprived are 16–24-year-olds, 3.5 percent. The largest decrease in deprivation was seen among single people under 65, and the biggest increase was recorded among lone parents,” the analyst said.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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