Last year, 20.2 percent of the population lived in relative poverty, defined as having an income of less than €807 per month. This a drop of more than 2 percent.

The reduction in relative poverty was mainly driven by an increase in pensions and support for families with multiple children.

Absolute poverty, defined as having an income of less than €338 per month, also declined, with 2.7 percent of the population falling into this category, a 0.8 percent decrease from the previous year.

"We must keep in mind that, first of all, our absolute poverty line has been set very low. While it did decrease, the reduction is minimal compared to two, three, or four years ago," said Epp Remmelg, lead analyst at Statistics Estonia.

The Ministry of Social Affairs said it has limited means of alleviating relative poverty. But, it also notes that those in need do not always apply for the subsistence benefits they are entitled to.

"If we are talking about, for example, subsistence benefits, this is where a person has to come and apply for it themselves. If we look at how many people we have in absolute poverty, for example, and how many come forward to apply for income support, there's actually still a gap there, " said Kati Nõlvak, the ministry's head of economic support.

The deprivation rate, which reflects the current year's data, has increased.

A total of 7.7 percent of the population experiences deprivation, with single-parent households being the most affected. The primary areas where people feel they are lacking are funds for unexpected expenses, the ability to take a one-week vacation per year, and the means to replace furniture.

SEB economic analyst Mihkel Nestor said people are concerned about the future.

"If I look at what has happened today, in reality even savings are increasing. And that is because people are worried about the future," he said. "Today, objectively, people's lives are not in trouble compared to previous recessions. After all, employment in Estonia is still very high, wage growth for two years in a row was in double digits even if we look at average gross wages, and the number is not going to be lower this year either."

On the other hand, the relative poverty of pensioners living alone in Estonia is the highest in Europe.

Although pensions have also risen in recent years, Estonia will probably stay at the top of the chart in the future, said Remmelg.

"Our pension system is still fundamentally different from that of Western Europe, where people have been contributing to their own pension funds for decades, which then provide additional income. Naturally, our generally low pensions are reflected in the fact that a significant portion of our elderly population lives in relative poverty — 71 percent," said Remmelg.

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