- Data from December 2010, most recent data: Further Eurostat information, Main tables and Database.
This article analyses recent statistics on living conditions in the European Union (EU). 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 income distribution within a country provides a picture of inequalities: on the 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. Non-income related factors that may influence living conditions include the quality of healthcare services, education and training opportunities, or individual’s access to goods and services – aspects that affect everyday lives and well-being.
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Main statistical findings
At-risk-of-poverty rate and threshold
In 2008, 16.5 % of the EU-27 population was assessed to be at-risk-of-poverty. This figure, calculated as a weighted average of national results, conceals considerable variations between countries. In five Member States, namely Latvia (25.6 %), Romania (23.4 %), Bulgaria (21.4 %), Greece (20.1 %) and Lithuania (20.0 %), one fifth or more of the population was assessed to be at-risk-of-poverty. Among the EU Member States the lowest percentages of persons at-risk-of-poverty were observed in the Czech Republic (9.0 %), the Netherlands (10.5 %) and Slovakia (10.9 %); Iceland (10.1 %) and Norway (11.3 %) also reported relatively low shares of their respective populations at-risk-of-poverty (see Figure 1).
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 from about 2 000 PPS in Romania and 3 000 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) – see Figure 1. In general, the at-risk-of-poverty rate is very stable from one year to the next. Between 2007 and 2008, the main exceptions to this rule were Latvia (with a sharp increase of 4.4 percentage points) and Ireland (with a reduction of 1.7 percentage points).
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 EU-27 (15.4 % compared with 17.4 % respectively), there were notable differences when the population was classified according to activity status (see Tables 1 and 2).
The unemployed are a particularly vulnerable group: a little over two fifths (44.5 %) of the unemployed were at-risk-of-poverty in the EU-27 in 2008, with the highest rates in Estonia (61.3 %), Germany (56.8 %), the United Kingdom and Bulgaria (both 55.0 %). About one in six (16.2 %) retired persons in the EU-27 were at-risk-of-poverty in 2008; rates were much higher in the Baltic Member States, Cyprus, Bulgaria and the United Kingdom. Those in employment were far less likely to be at-risk-of-poverty (8.5 % in the EU-27), although there were relatively high rates in Romania (17.5 %) and Greece (14.3 %) – see Table 2.
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-27 from 25.1 % before transfers to 16.5 % after transfers, thereby lifting 34 % of those in poverty above the poverty line. In percentage terms, the impact of social benefits was lowest in Greece, Latvia, Spain, Italy, Bulgaria, Estonia, Romania and Cyprus. In contrast, half or more of those persons who were at-risk-of poverty in Hungary, Denmark, Sweden, the Czech Republic, Ireland and Finland were removed as a result of social transfers; this was also the case in Norway (see Figure 2).
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 (see Figure 3).
There were wide inequalities in the distribution of income among the population of the EU-27 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 the Czech Republic, Slovenia and Slovakia to more than 6.0 in Portugal and Bulgaria, reaching 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. Across the EU-27 as a whole, people aged 65 and more had a median income which in 2008 was around 85 % of the median income for the population under the age of 65. Hungary was the only Member State where the income of the elderly was at the same level as 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 Latvia and Cyprus had median incomes that were less than 60 % of those recorded for people under 65, with shares between 60 % and 70 % in Estonia, Bulgaria and Denmark (see Figure 4). These relatively low proportions may broadly reflect pension entitlements.
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-27 was an average 21.8 % below the 60 % poverty threshold in 2008. Among the countries shown in Figure 5, the national at-risk-of-poverty gap was widest in Romania (32.3 %), Latvia (28.6 %) and Bulgaria (27.0 %), but also relatively wide in Lithuania (25.7 %) and Greece (24.7 %). The lowest gap among the Member States was observed in the Netherlands ((4.9 %), followed by Austria (15.3 %), while there was also a relatively low gap in Iceland (15.0 %).
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, while those who lack four or more items are considered to be severely deprived. About one in every six (17.3 %) members of the EU population were materially deprived in 2008, while 8.5 % suffered from severe material deprivation; there were considerable discrepancies between the Member States that joined the EU in 2007, those that joined in 2004, and the EU-15 Member States. Less than one in ten people in Luxembourg, the Nordic Member States, the Netherlands and Spain were materially deprived, whereas the proportion rose to around one third of the population in Latvia, Hungary and Poland and reached 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 Romania and Bulgaria (see Figure 6).
Persons living in households with a low work intensity
Being in employment is generally an effective way to secure oneself against the risk of poverty. People living in households with a low work intensity (people aged 0 to 59 living in households where the adults worked less than 20 % of their total work potential during the year prior to the survey) were more likely to be exposed to social exclusion. In 2008, 9.0 % of the EU-27 population lived in households with low work intensity. The highest percentages among the countries shown in Figure 7 were registered in Ireland (13.6 %), Hungary (12.0 %), Belgium (11.7 %) and Germany (11.6 %) while the lowest were in Sweden (5.4 %), Estonia (5.3 %), Slovakia (5.2 %), Latvia, Lithuania (both 5.1 %), Luxembourg (4.7 %) and Cyprus (4.1 %), as well as in Iceland (2.6 %).
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, six Member States (Austria, Belgium, Denmark, Greece, Ireland, Luxembourg) and Norway. It was formally launched in 2004 in 15 countries and expanded in 2005 to cover all of the then EU-25 Member States, together with Iceland and Norway. Bulgaria launched EU-SILC in 2006, while Romania, Switzerland and Turkey introduced the survey in 2007.
EU-SILC 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 article, 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 income reference period is a fixed 12-month period (such as the previous calendar or tax year) for all countries except the United Kingdom for which the income reference period is the current year of the survey and Ireland for which the survey is continuous and income is collected for the 12 months prior to the survey.
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 analyses of this indicator are available, for example by age, gender, activity status, household type, or education level. It should be noted that this indicator does not measure wealth but is instead a measure of low current income (in comparison with other people in the same country) which does not necessarily imply a low standard of living. The EU-27 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.
Context
At the Laeken European Council in December 2001, European heads of state and government endorsed a first set of common statistical indicators for 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 framework Regulation 1177/2003, it is now the reference source for statistics on income and living conditions and for common indicators of social inclusion in particular.
In the context of the Europe 2020 strategy, the European Council adopted in June 2010 a headline target on social inclusion. EU-SILC is the source for the three sub-indicators on which this new target is based, namely the at-risk-of-poverty rate, severe material deprivation rate and persons living in households with low work intensity.
Further Eurostat information
Publications
- 17 % of EU citizens were at-risk-of-poverty in 2008 Statistics in focus 9/2010
- 51 million young EU adults lived with their parent(s) in 2008 - Statistics in focus 50/2010
- Combating poverty and social exlusion. A statistical portrait of the European Union 2010
- Income and living conditions in Europe
- Living conditions in Europe
- Over-indebtedness of European households in 2008 - Statistics in focus 61/2010
- The life of women and men in Europe – A statistical portrait (available in English, French and German)
- The Social Situation in the European Union 2009
Main tables
- Living conditions (t_ilc_lv)
- Population structure (t_ilc_lvps)
- Distribution of population by household types (Source: SILC) (tesov190)
- Housing conditions (t_ilc_lvho)
- Overcrowding rate (t_ilc_lvho_or)
- Housing cost burden (t_ilc_lvho_hc)
- Population structure (t_ilc_lvps)
- Material deprivation (t_ilc_md)
- Material deprivation by dimension (t_ilc_mddd)
- Housing deprivation (t_ilc_mdho)
- Environment of the dwelling (t_ilc_mddw)
Database
- Living conditions (ilc_lv)
- Private households (ilc_lvph)
- Population structure (ilc_lvps)
- Health and labour conditions (ilc_lvhl)
- Housing conditions (ilc_lvho)
- Childcare arrangements (ilc_ca)
- Material deprivation (ilc_md)
Dedicated section
Methodology / Metadata
- Income and living conditions (ESMS metadata file - ilc_esms)
- Comparative EU Statistics on Income and Living Conditions: Issues and Challenges (Proceedings of the International Conference on EU Comparative Statistics on Income and Living Conditions, Helsinki, 6-8 November 2006)
- What can be learned from deprivation indicators in Europe?
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
