Ossinovski expects poverty significantly decreased in 2018

SDE chairJevgeni Ossinovski.
SDE chairJevgeni Ossinovski. Source: Anna Aurelia Minev/ERR

Chairman of the Social Democratic Party (SDE) and former health minister, Jevgeni Ossinovski, expects poverty in Estonia to decrease as an effect of the current government's income tax reform, though the actual impact will become clear only after data is evaluated next year.

Mr Ossinovski commented on results published by Statistics Estonia on Tuesday, according to which the at-risk-of-poverty rate increased from 2016 to 2017. "The figure for 2018 will definitely be different from that of last year. We're going to see that only in a year, though," Mr Ossinovski said.

According to data published by Statistics Estonia on Tuesday, 295,000 people or 22.6% of Estonia's population were at risk of poverty in 2017, a ratio 1.6 percentage points higher than in 2016.

The income of those Estonian residents that live just above the breadline grew at a slower rate in 2017 than previously, Statistics Estonia reported on Tuesday.

"The at-risk-of-poverty rate demonstrates income inequality in Estonia's society, as being at risk of poverty is measured as a ratio to the median wage. And since wages have generally grown in our country, we can see that there is the worrying tendency that no balancing trend has emerged in Estonian society. The inequality of incomes is high, one of the highest in Europe, and there are no signs of change," Mr Ossinovski said.

Income tax reform to improve situation

The government's income tax reform that entered into force in early 2018 are expected to lift thousands of people out of poverty, Ossinovski said. The government's measures included nixing tax-deductible income for those who earn the most, and increasing the deductible amount for those earning the least.

"The aim, at least according to an analysis made when it was adopted, was for it to help 50,000 working people out of the at-risk-of-poverty bracket," Mr Ossinovski said.

The SDE chairman also pointed out that poverty among children has decreased sharply, largely as a result of policies initiated by his party.

"While in 2014 almost 10% of children in Estonia lived in absolute poverty, last year that ratio was 3.2%. And this is the result of the vigorous family policy steps we have taken in the government," he added.

Situation would be worse without state intervention, says Statistics Estonia

According to Statistics Estonia, the situation would be worse if it weren't for the interventions of the state: social transfers in the form of state benefits and pensions helped prevent people from slipping into poverty. Without those benefits, 38.5% of the population would have been at risk of poverty (39.2% a year before) and 22.8% in absolute poverty (24.6% a year before) in 2017.

Compared to 2016, the at-risk-of-poverty rate decreased both among children and among young people, but increased among older people. In 2017, 47.5% of people aged 65 and older lived at risk of poverty (41.2% in 2016). Among children under 18, the at-risk-of-poverty rate was 15.9% or 0.6 percentage points lower than in the previous year. The absolute poverty rate of children fell as well from 3.5% in 2016 to 3.2% in 2017.

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Editor: Dario Cavegn

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