Statistics Estonia released data last week on how people in Estonia are managing, offering hope that a well-functioning Estonia remains an achievable and necessary goal.

Compared to 2022, the percentage of people living in relative poverty decreased by 2.3 percentage points, and the share of those living in absolute poverty fell by 0.8 percentage points. In 2023, these figures stood at 20.2 percent and 2.7 percent of the population, respectively. Last year, approximately 274,800 people were living in relative poverty, which is nearly 29,000 fewer than in 2022. Meanwhile, around 36,400 people experienced absolute poverty in 2023, a decrease of roughly 11,300 compared to the previous year.

The main factors driving these improvements have been increases in wages, pensions, child benefits and family support. For years, the highest rates of relative poverty have been observed among elderly people living alone and households led by single parents. However, 2023 saw the most significant reduction precisely within these groups.

Still, those most in need of support continue to be pensioners living alone, single parents raising children and the unemployed, among whom absolute poverty rates remain high. Therefore, our primary focus must be on helping those for whom day-to-day survival remains most difficult, through both services and financial support.

We have taken several steps in recent years to address this. To improve people's living conditions, we have raised and continue to increase pensions. Last year saw the largest pension increase in the past 15 years and old-age pensioners are guaranteed a tax-free income up to a specified amount, independent of other earnings (set at €776 in 2024).

In July of last year, a care reform was implemented, making care home placements more accessible and reducing both the financial burden and caregiving responsibilities of family members.

According to data from the Estonian Labor Force Survey, the burden of caring for family members has already decreased compared to 2022. The number of caregivers aged 65 and older has fallen by 1,400, particularly among those who care for family members for more than 20 hours per week.

This year, we also made sickness and care benefits fairer for parents returning from parental leave. Child and family benefits have increased, support for single parents has been boosted and child maintenance allowance has doubled. Additionally, children and working-age individuals with special needs will have better access to tools that support their independence starting next year, and their benefits will also rise.

What is relative poverty and what is absolute poverty? In brief, relative poverty refers to income disparities and denotes a standard of living below the median. It is somewhat inevitable in a free-market economy where earnings vary. However, it is the state's duty to support those whose sense of security is fragile through various services.

Absolute poverty, on the other hand, highlights the portion of society unable to sustain themselves independently. There are various reasons for this, and while individuals in both categories need certain forms of state support, it is absolute poverty that we must strive to eliminate as a society.

Reflecting on our country's history and progress, we have made significant strides since 1997, with absolute poverty decreasing tenfold. Yet, we must continue working across all sectors.

Estonia's economy must be robust and productive to prevent wage poverty and to maintain a sustainable tax system capable of adequately supporting those most in need.

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