Incomes rising but so is inequality in Latvia

Take note – story published 2 years and 6 months ago

The results of the survey conducted by the Central Statistical Bureau (CSB) in 2021 show that, compared to 2019, in 2020 household disposable income, increased by 8.1 %, reaching EUR 630 per household member monthly. Income grew faster than in 2019, when it rose by 6.8 % on the previous year.

The highest incomes were in Rīga, where they amounted to EUR 751 per household member per month. In Pierīga incomes were EUR 718 per household member per month, in Zemgale - EUR 557 and in Kurzeme - EUR 527. The lowest incomes were in Vidzeme (EUR 518 per month) and Latgale (EUR 445 per month). In urban areas income per one household member reached EUR 657 monthly and in rural areas – EUR 573 monthly.

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There was a huge difference between incomes in the richest and poorest sections of society. In 2020 income per household member in the poorest households (1st quintile group) comprised EUR 214 monthly, but in the richest households (5th quintile group) – EUR 1 408 monthly. In households with average income they fluctuated from EUR 367 monthly (2nd quintile group) to EUR 721 monthly (4th quintile group).

In fact the figures suggest the trend is towards even greater income inequality. In 2020, the income of the richest households was 6.6 times higher than that of the poorest households, which was just 0.3 times higher than in 2019.

Compared to other EU Member States, income inequality in Latvia remained high. According to the latest available data, Latvia has the second highest Gini coefficient compared to other EU countries. The Gini coefficient is a measure of income inequality and varies from 0 to 100. The Gini coefficient amounts to 0 if there is absolute equality of income (i.e., all population has the same income), but the closer it gets to 100, the greater the inequality of income.

In 2019, only Bulgaria had a higher rate (40 %) than Latvia, which had a rate of 34.5%. For 2020, the figure rose to 35.7%, its highest level for at least 6 years.

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For households with one adult and children under 17, income per household member fell by 8.9 %, from EUR 483 per household member per month in 2019 to EUR 440 in 2020. For couples with three or more children, income decreased by 0.3 % over the year. Income grew fastest for couples without children and couples with one child, by 13.7 % and 10.6 % respectively.

The amount of social transfers (pensions, allowances and other budgetary payments) grew significantly faster than income from labor. Income from social transfers per household member increased by 14.1 %, from EUR 133 per month in 2019 to EUR 152 per month in 2020. In turn, household income from labor per household member increased by only 6.0 %, from EUR 412 to EUR 436 per month. 

Income from labor accounted for 69.2 % of household disposable income and social transfers for 24.1 % in 2020.

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