- Data from July 2010, most recent data: Further Eurostat information, Main tables and Database.
Favourable living conditions depend on a wide range of factors, which may be divided into those that are income-related and those that are not. The latter include quality healthcare services, education and training opportunities or access to goods and services – aspects that affect everyday lives and wellbeing. The income distribution within a country provides a picture of inequalities: on one hand, inequalities may create incentives for people to improve their situation through work, innovation or acquiring new skills, while on the other, crime, poverty and social exclusion are often seen as being linked to such income inequalities. European Union (EU).
Main statistical findings
At-risk-of-poverty rate and threshold
In 2008, 16.5 % of the EU population was assessed to be at-risk-of-poverty. This figure, calculated as a weighted average of national results, conceals considerable variation between countries. In five Member States (Lithuania – 20.0 %, Greece – 20.1 %, Bulgaria – 21.4 %, Romania – 23.4 % and Latvia – 25.6 %) one fifth or more of the population was assessed to be at-risk-of-poverty. The lowest percentages of persons at-risk-of-poverty were observed in the Czech Republic (9.0 %), Iceland (10.1%), the Netherlands (10.5 %), Slovakia (10.9%) and Norway (11.3 %).
The at-risk-of-poverty threshold is set at 60 % of the national median equivalised disposable income. It is often expressed in purchasing power standards (PPS) in order to take account of the differences in the cost of living across countries. It varies greatly across EU countries from about 2000 PPS in Romania and 3000 PPS in Bulgaria to more than 10 000 PPS in eight Member States as well as Iceland and Norway, with the highest value in Luxembourg (16 000 PPS).
In general, the at-risk-of-poverty rate is very stable from one year to the following. Between 2007 and 2008, the main exceptions were Latvia with a sharp increase by 4.4 percentage points (pp) as well as Ireland with a reduction of 1.9 pp.
Different groups in society are more or less vulnerable to monetary poverty. Although in 2008 there was little difference in the at-risk-of-poverty rate (after social transfers) between men and women in the EU27 (15.6 % compared with 17.5 % respectively), there were notable differences when the population was classified according to activity status. The unemployed are a particularly vulnerable group: a little over two fifths (44.6 %) of the unemployed was at-risk-of-poverty in the EU27 in 2008, with the highest rates in the United Kingdom (54.5 %), Bulgaria (55.6%), Germany (56.8 %) and Estonia (60.6 %). About one in six (16 %) retired persons in the EU27 was at-risk-of-poverty in 2008; rates were much higher in the Baltic Member States, Bulgaria, the United Kingdom and Cyprus. Those in employment were far less likely to be at-risk-of-poverty (8.6 % in the EU27), although there were relatively high rates in Greece (14.3 %) and Romania (17.7 %).
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Social protection measures can be used as a means for reducing poverty and social exclusion. This may be achieved, for example, through the distribution of benefits. One way of evaluating the success of social protection measures is to compare at-risk-of-poverty indicators before and after social transfers.
In 2008, social transfers reduced the at-risk-of-poverty rate among the population of the EU from 25.1 % before transfers to 16.5 % after transfers, thereby lifting 34 % of those in poverty above the poverty line. The impact of social benefits was lowest in Greece, Latvia, Spain Italy, Bulgaria and Estonia. In contrast, more than one half of those persons who were at-risk-of poverty in Ireland, Czech Republic, Norway, Sweden, Denmark and Hungary were removed as a result of social transfers.
Income inequalities
Societies cannot combat poverty and social exclusion without analysing inequalities within society, whether they are economic in nature or social. Data on economic inequality becomes particularly important for estimating relative poverty, because the distribution of economic resources may have a direct bearing on the extent and depth of poverty.
There were wide inequalities in the distribution of income among the population of the EU in 2008; the 20 % of the population with the highest equivalised disposable income received five times as much income as the 20 % of the population with the lowest equivalised disposable income. This ratio varied considerably across the Member States, from 3.4 in Czech Republic, Slovenia and Slovakia through more than 6.0 in Portugal and Bulgaria, to highs of 7.0 in Romania and 7.3 in Latvia.
There is policy interest in the inequalities felt by many different groups in society: one group of particular interest is that of the elderly, in part reflecting the growing proportion of the EU’s population aged over 65 years. Pension systems can play an important role in addressing poverty amongst the elderly. In this respect, it is interesting to compare the incomes of the elderly with the rest of the population. At EU level people aged 65 and more had on average in 2008 a median income which was around 85 % of the median income for the population below the age of 65. Hungary was the only Member State where the income of the elderly was at this same level that it was for persons under 65; in Luxembourg, Poland, France and Austria, the median income of the elderly was more than 90 % of that recorded for people under 65. In contrast, the elderly in Cyprus had a median income that was around 59 % and Latvia 54 % of that recorded for people under 65, with shares between 60 % and 70 % in Estonia, Bulgaria and Denmark. These relatively low proportions may broadly reflect pension entitlements, which mainly benefited people of an active age.
The depth of poverty, which helps to quantify just how poor the poor are, can be measured by the relative median at-risk-of poverty gap. The median income of persons at risk-of-poverty in the EU was an average 21.9 % below the 60 % poverty threshold in 2008. Among the EU countries, the national at-risk-of-poverty gap was widest in Romania (32.3 %), Latvia (28.6 %) and Bulgaria (27 %), but also relatively wide in Lithuania (25.7 %) and Greece (24.7 %). The lowest gap – 15 % – was observed in the Netherlands, Iceland (both 14.9 %) and Austria (15.3 %).
Material deprivation
Income-related measures of poverty need to be analysed together with other measures –such as material deprivation – in order to have a deeper understanding of poverty. The material deprivation rate provides a headcount of the number of people who cannot afford to pay for at least three from a list of nine items (see 'data sources and availability'), while severely deprived are those who lack at least four items. About one in every six (17.4 %) of the EU population was materially deprived in 2008, while 8.2 % suffered from severe material deprivation with great discrepancies between the pre- and post-2004 accession Member States. Less than one in ten people in Luxembourg, the Nordic Member States and the Netherlands as well as in Spain were materially deprived, whereas the proportion rose to around one third in Latvia, Hungary and Poland and moved around half of the population in Romania and Bulgaria. The proportion of people severely deprived ranged from below 3 % in Spain, Denmark, the Netherlands, Sweden and Luxembourg to more than 30 % in Bulgaria and Romania.
Persons living in households with a low work intensity
Being in employment is an effective way to secure oneself against the risk of poverty. People living in households with a low work intensity (people aged 0-59 living in households where the adults work less than 20 % of their total work potential during the past year) are more likely exposed to social exclusion. In 2008, 8.2 % of the EU population lived in households with low work intensity. The highest percentages were registered in the United Kingdom (13.9 %), Hungary (12.7 %), Ireland (11.5 %) and Poland (10.5 %) while the lowest in Lithuania, Estonia, Slovakia, Latvia, Luxembourg (all around 4 %) and Cyprus (3.4 %).
Persistent risk of poverty
The ‘persistent at-risk-of-poverty rate’ shows the percentage of the population living in households where the equivalised disposable income was below the ‘at-risk-of-poverty threshold’ for the current year and at least 2 out of the preceding 3 years. It requires the longitudinal data transmitted so far for the 2005-2008 data by only 14 Member States and Norway. The highest values were observed in Estonia (13.6 %) and Latvia (12.6 %) while the lowest ones were in the Netherlands, Austria and Norway (all around 6 %).
Data sources and availability
EU Statistics on Income and Living Conditions (EU-SILC) was launched in 2003 on the basis of a gentlemen's agreement between Eurostat and six Member States (Austria, Belgium, Denmark, Greece, Ireland, Luxembourg) and Norway. It was formally launched in 2004 in fifteen countries and expanded in 2005 to cover all of the then EU25 Member States, together with Norway and Iceland. Bulgaria launched EU-SILC in 2006 while Romania, Switzerland and Turkey introduced the survey in 2007. It comprises both a cross-sectional dimension and a longitudinal dimension.
While comparisons of standards of living between countries are frequently based on GDP per capita, such figures say little about the distribution of income within a country. In this section, indicators measuring the distribution of income and relative poverty are presented. Household disposable income is established by summing up all monetary incomes received from any source by each member of the household (including income from work, investment and social benefits) plus income received at the household level and deducting taxes and social contributions paid. In order to reflect differences in household size and composition, this total is divided by the number of ‘Equivalent adults’ using a standard (equivalence) scale, the so-called ‘modified OECD’ scale, which attributes a weight of 1 to the first adult in the household, a weight of 0.5 to each subsequent member of the household aged 14 and over, and a weight of 0.3 to household members aged less than 14. The resulting figure is called Equivalised disposable income and is attributed to each member of the household. For the purpose of poverty indicators, the equivalised disposable income is calculated from the Total disposable income of each household divided by the equivalised household size; consequently, each person in the household is considered to have the same equivalised income.
The At-risk-of-poverty rate is defined as the share of people with an equivalised disposable income that is below the At-risk-of-poverty threshold (expressed in purchasing power standards – PPS), set at 60 % of the national median equivalised disposable income. This rate may be expressed before or after social transfers, with the difference measuring the hypothetical impact of national social transfers in reducing poverty risk. Retirement and survivors' pensions are counted as income before transfers and not as social transfers. Various breakdowns of this indicator are calculated: by age, gender, activity status, household type, education level, etc. It should be noted that this indicator does not measure wealth but low current income (in comparison with other people in the same country) which does not necessarily imply a low standard of living. The EU aggregate is a population-weighted average of individual national figures. In line with decisions of the European Council, the at-risk-of-poverty rate is measured relative to the situation in each country rather than applying a common threshold to all countries.
The S80/S20 income quintile share ratio is a measure of the inequality of income distribution and is calculated as the ratio of total income received by the 20 % of the population with the highest income (the top quintile) to that received by the 20 % of the population with the lowest income (the bottom quintile); where all incomes are compiled as equivalised disposable income.
The Relative median income ratio is defined as the ratio of the median equivalised disposable income of people aged above 65 to the median equivalised disposable income of those aged below 65.
The Relative median at-risk-of-poverty gap is calculated as the difference between the median equivalised disposable income of people below the at-risk-of-poverty threshold and the at-risk-of-poverty threshold, expressed as a percentage of the at-risk-of-poverty threshold (cut-off point: 60 % of median equivalised income).
Material deprivation, covers an economic strain and a durables strain, defined as the enforced inability (rather than the choice of not being able/having) to pay for at least three of the following nine items: unexpected expenses; one week annual holiday away from home; arrears (mortgage or rent payments, utility bills, or hire purchase instalments or other loan payments); a meal with meat or fish every other day; heating to keep the home adequately warm; a washing machine; a colour television; a telephone; or a car. Severe material deprivation rate is defined as the enforced inability to pay for at least four of the above mentioned items.
The work intensity of the household refers to the ratio between on the one hand the number of months that all working age household members have been working during the income reference year and on the other hand the total number of months that could theoretically have been worked by the same household members. A working age person is defined as a person aged 18-59, not being a student aged between 18 and 24. The households composed only of children, of students aged less then 25 and/or people aged 60 or more are totally excluded from the indicator computation. The indicator persons living in households with low work intensity is defined as the share of Persons with the work intensity of the household below the threshold set at 0.20.
The calculation of Persistent at-risk-of-poverty rate requires a longitudinal instrument, through which the individuals are followed over four years. The indicator shows the percentage of the population living in households where the equivalised disposable income was below the at-risk-of-poverty threshold for the current year and at least two out of the preceding 3 years.
Context
At the Laeken European Council in December 2001, European heads of state and government endorsed a first set of common statistical indicators of social exclusion and poverty that are subject to a continuing process of refinement by the Indicators Sub-group (ISG) of the Social Protection Committee (SPC). These indicators are an essential element in the Open Method of Coordination to monitor the progress of Member States in the fight against poverty and social exclusion.
EU-SILC was implemented in order to provide underlying data for these indicators. Organised under a Framework Regulation 1177/2003, it is now the reference source for statistics on income and living conditions and for common indicators for social inclusion in particular.
In the context of the Europe 2020 Agenda, the European Council adopted in June 2010 a Headline Target on social inclusion. EU-SILC is the reference source for the three sub-indicators on which this new target is based (at-risk-of-poverty rate, severe material deprivation rate and persons living in households with low work intensity).
Further Eurostat information
Publications
- 79 million EU citizens were at-risk-of-poverty in 2007, of whom 32 million were also materially deprived - Statistics in focus 46/2009
- The social situation in the European Union 2005-2006
- The life of women and men in Europe – A statistical portrait
- Living conditions in Europe - Statistical pocketbook - Data 2002-2005
Main tables
Database
Dedicated section
Other information
Regulation 1177/2003 of 16 June 2003 concerning Community statistics on income and living conditions (EU-SILC) Regulation 1553/2005 of 7 September 2005 amending Regulation 1177/2003 concerning Community statistics on income and living conditions (EU-SILC) Regulation 1791/2006 of 20 November 2006 adapting certain Regulations and Decisions in the fields of ... statistics, ..., by reason of the accession of Bulgaria and Romania
External links
- OECD statistics - Income distribution - Inequality (country-by-country comparisons)