European Neighbourhood Policy - East - living conditions statistics

Data extracted in November 2018.

Planned article update: January 2020.

Highlights

Among the European Neighbourhood Policy-East countries, Moldova reported a similar level of income inequality to the EU in 2017, while Georgia and Armenia reported more pronounced levels of inequality.

Among the European Neighbourhood Policy-East countries, Armenia, Belarus and Moldova reported lower at-risk-of-poverty rates before social transfers than the EU in 2017.

The impact of social transfers on risk of poverty was much greater in the EU than in the European Neighbourhood Policy-East countries in 2017.

Inequality of income distribution (income quintile share ratio), 2007 and 2017
(ratio)
Source: Eurostat (ilc_di11)

This article is part of an online publication; it presents information on a range of statistics covering living conditions for the European Union (EU) and six countries that together form the European Neighbourhood Policy-East (ENP-East) region: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Note that data shown in this article for Georgia exclude the regions of Abkhazia and South Ossetia over which the government of Georgia does not exercise effective control and data for Moldova exclude Transnistria. The latest data for Ukraine generally exclude the territories which are not under effective control of Ukrainian government and the illegally annexed Autonomous Republic of Crimea and the City of Sevastopol (see specific footnotes for precise coverage).

The article includes information relating to income distribution, the risk of poverty (before and after social transfers), the proportion of jobless households, as well as data relating to health and social protection expenditure.

Full article

Income distribution

The income quintile share ratio, also known as the S80/S20 ratio, is a measure of the inequality of income distribution. It is calculated as the ratio of the total income received by the 20 % of the population with the highest incomes (the top quintile) to that received by the 20 % of the population with the lowest incomes (the bottom quintile). Incomes are equivalised to take account of the varying composition of households.

Figure 1 shows that the cumulative income of the top population quintile in the EU-28 was 5.1 times the size of the cumulative income of the bottom population quintile in 2017, a similar ratio to that observed in 2007 (5.0 %; data excluding Croatia). In 2017, Moldova reported a similar level of income inequality to that observed in the EU-28, while Georgia and Armenia (2016 data) reported more pronounced levels of inequality. The three other ENP-East countries reported a more equal income distribution than the EU-28 (based on this indicator), with the lowest ratio recorded in Azerbaijan where the income of the top population quintile was 2.3 times as high as the income of the bottom population quintile. Between the two years shown in Figure 1, the income quintile share ratio fell or was roughly stable in most of the ENP-East countries but it rose in Armenia (2007-2016).

Figure 1: Inequality of income distribution (income quintile share ratio), 2007 and 2017
(ratio)
Source: Eurostat (ilc_di11)

The Gini coefficient is an alternative measure of income inequality. It shows the extent to which all incomes within the population differ from the average income: the closer the coefficient is to 100 the less equal are the incomes, while the closer it is to 0 the more equal are the incomes. In the EU-28, the Gini coefficient in 2017 was 30, around the same as it had been in 2007 (data for excluding Croatia). As was already observed for the income quintile share ratio, Moldova also reported a Gini coefficient (31) that was similar to the value observed for the EU-28, while Armenia (2016 data) and Georgia reported higher values, and Belarus and Ukraine reported lower values. Armenia reported a modest increase in its level of income inequality (as measured by the Gini coefficient) between the years shown in Figure 2 (although there is a break in series) while the other ENP-East countries for which data are available reported a fall in this coefficient between the years shown in Figure 2.

Figure 2: Gini coefficient, 2007 and 2017
(ratio)
Source: Eurostat (ilc_di12)

Monetary poverty

The poverty threshold shown in Table 1 is set at 60 % of the national median equivalised disposable income (after social transfers). The total net income of each household is calculated by adding together the income received by all the members of the household from all sources. For each person, the equivalised total net income is calculated as the household’s total net income divided by the equivalised household size, generally based on the modified OECD scale: a weight of 1.0 for the first adult, 0.5 for other persons aged 14 or over who are living in the household and 0.3 for each child aged less than 14. Note that some ENP-East countries use different scales for calculating the equivalised household size. The poverty threshold is shown as a monthly income, ranging among the ENP-East countries in 2017 from the equivalent of EUR 57 in Georgia to EUR 118 in Belarus.

The at-risk-of-poverty rate is the proportion of the population with an equivalised disposable income below the at-risk-of-poverty threshold. This indicator can be calculated either before or after social transfers, the difference reflecting the proportion of the population moved above the threshold as a result of receiving social transfers. Social transfers cover the social help given through benefits such as: old-age and survivors’ (typically widows’ and widowers’) pensions; unemployment, family-related, sickness and invalidity, education-related and other benefits; housing allowances; social assistance.

As the poverty threshold is set independently for each country, at-risk-of-poverty indicators reflect low incomes in comparison with other residents of the same country, which do not necessarily imply a low standard of living. In the EU-28, 43.9 % of the population were at risk of poverty before taking account of social transfers in 2017, with this share dropping to 16.9 % as a consequence of social transfers. Data concerning the at-risk-of-poverty rate before transfers are available for three ENP-East countries, Armenia, Belarus and Moldova, all of which reported rates below that of the EU-28 — see Table 1. However, the impact of social transfers was greater in the EU-28 than in the ENP-East countries, such that — among the five ENP-East countries for which the rate after social transfers is available — only in Belarus was the at-risk-of-poverty (11.3 %) lower than in the EU-28.

Table 1: Poverty main indicators, 2017
Source: Eurostat (ilc_li02) and (ilc_li09)

Between 2007 and 2017, the proportion of the EU population at risk of poverty after transfers increased slightly from 16.6 % (excluding Croatia) to 16.9 %. By contrast, in three of the five ENP-East countries for which data are shown in Figure 3 (Ukraine, Moldova and Belarus) the proportion of the population at risk of poverty fell; the exceptions where the risk of poverty increased were Armenia (between 2007 and 2016; note there is a break in series) and Georgia.

Figure 3: Proportion of the population at risk of poverty after transfers, 2007 and 2017
(%)
Source: Eurostat (ilc_li02)

Households with very low work intensity

Indicators on households with very low work intensity are normally compiled from a labour force survey (LFS) and identify households where the members of working age were employed for less than 20 % of their total potential during the previous 12 months. The two indicators presented in Figure 4 and Table 2 concern different sub-populations: people aged 0-17 and those of working age, in this case defined as 18-59.

Figure 4: Proportion of persons who are living in households with very low work intensity, 2017
(%)
Source: Eurostat (ilc_lvhl11)

In 2017, around 1 in 10 people (9.9 %) of working age in the EU-28 lived in households with very low work intensity, whereas the share for young people was somewhat lower (7.5 %). In Georgia (2016 data) and Moldova the proportions were lower than in the EU-28, particularly in Moldova where 4.3 % of all persons aged 18-59 were living in a household with very low work intensity. Note that for Georgia the indicator concerns jobless households rather than households with very low work intensity. Concerning young people, the proportion was somewhat higher in Georgia than in the EU-28, while in Moldova it was considerably lower than in the EU-28.

Table 2: Proportion of persons who are living in households with very low work intensity, 2007, 2012 and 2017
(%)
Source: Eurostat (ilc_lvhl11)

Health and social protection expenditure

Expenditure on health concerns current expenditure on health and investment, regardless of the source of funds. It covers: curative and rehabilitative care (in-patient care, day cases, out-patient and home care); services of long-term nursing care (in-patient, day cases and home care); ancillary services to health care; medical goods dispensed to out-patients; services of prevention and public health; health administration and health insurance. The level of expenditure on health relative to gross domestic product (GDP) ranged greatly between the ENP-East countries in 2017, from 4.1 % of GDP in Belarus to 10.1 % of GDP in Moldova (2015 data). Belarus was the only ENP-East country (among the three with data available for both reference periods) to report a fall in health expenditure relative to GDP between the years shown in Table 3.

Table 3: Expenditure on health, social protection benefits and pensions, relative to gross domestic product, 2007 and 2017
(% of GDP)
Source: Eurostat (spr_exp_sum)

Social protection expenditure comprises social protection benefits, administration costs and other expenditure: the data shown in Table 3 only concern benefits. Social benefits consist of transfers, in cash or in kind, by social protection schemes to households and individuals to relieve them of the burden of a defined set of risks or needs, provided that there is neither a simultaneous reciprocal nor an individual arrangement involved. The list of risks or needs is fixed as: sickness/health care; disability; old-age; survivors; family/children; unemployment; housing; and other social exclusion. Note that not all health expenditure falls within social protection expenditure.

In 2014, expenditure on social protection benefits in the EU-28 was equivalent to more than one quarter (27.5 %) of GDP. This level was surpassed in Ukraine (28.1 %; 2015 data), while in Belarus the ratio was, in 2017, just over half the level in the EU-28, in Armenia it was nearer to one third of the EU-28 level, and in Georgia it was closer to one quarter of the level recorded in the EU-28.

Between 2007 and 2014, the ratio of EU-28 expenditure on social protection benefits to GDP increased from 24.2 % (data excluding Croatia) to 27.5 %. The ENP-East countries for which data are available in Table 3 also reported increases in this ratio over a similar period of time, most notably in Armenia where the ratio nearly trebled from 3.5 % in 2007 to 9.3 % in 2015.

One underlying factor that may explain the increase of expenditure on social protection benefits is an increase in pension payments, which may be linked to an ageing population and hence a growing number of pensioners. Between 2007 (data excluding Croatia) and 2014, the ratio of social protection expenditure on pensions relative to GDP rose from 11.0 % to 12.6 % in the EU-28, an increase of 1.6 percentage points. Three out of the five ENP-East countries for which data are available also recorded an increase, ranging from 0.3 percentage points in Belarus (between 2007 and 2017) to 1.6 percentage points in Armenia (between 2008 and 2017). By contrast, expenditure on pensions fell relative to GDP by 0.6 percentage points in Moldova between 2007 and 2017 and by 3.2 points in Ukraine (between 2007 and 2016).

Expenditure on pensions accounted for just under half of the total expenditure on social protection benefits in the EU-28 in 2014. By contrast, the share was above 50 % in the ENP-East countries for which data are available for a common reference year, approaching two thirds in Belarus and four fifths in Armenia.

Figure 5: Expenditure on health, social protection benefits and pensions, relative to gross domestic product, 2017
(%)
Source: Eurostat (spr_exp_sum)

Data sources

The data for ENP-East countries are supplied by and under the responsibility of the national statistical authorities of each country on a voluntary basis. The data result from an annual data collection cycle that has been established by Eurostat. These statistics are available free-of-charge on Eurostat’s website, together with a range of additional indicators for ENP-East countries covering most socio-economic topics.

EU statistics on income and living conditions (EU-SILC) is an instrument that aims to collect timely and comparable data on income, poverty, social inclusion and living conditions, in both monetary and non-monetary terms. The data are generally collected for private households and household members. EU-SILC provides both cross-sectional data and longitudinal data (typically over a four-year period). The legal basis for this data collection exercise is a Regulation of the European Parliament and of the Council (EC) No 1177/2003 concerning Community statistics on income and living conditions (EU-SILC); it is supported by a series of implementing regulations and special data collection modules that relate to the collection of secondary variables on a less regular basis.

The European system of integrated social protection statistics (ESSPROS) is a common framework developed within the European statistical system (ESS) that has been designed to provide a coherent comparison across European countries (28 EU Member States plus Iceland, Norway, Switzerland, Serbia and Turkey) of social benefits to households and their financing, in terms of precisely defined risks or needs that refer to the ESSPROS functions: disability, sickness/health care, old-age, survivors, family/children, unemployment, housing and social exclusion. The legal basis for the data collection exercise is provided by Regulation (EC) No 458/2007 of the European Parliament and of the Council on the European system of integrated social protection statistics (ESSPROS). ESSPROS is composed of a core system that contains annual data from 1990 onwards on (gross) expenditures and receipts. In addition to the core system, one module on pension beneficiaries and one on net social benefits data are available.

Tables in this article use the following notation:

Value in italics     data value is forecasted, provisional or estimated and is therefore likely to change;
: not available, confidential or unreliable value;
not applicable.

Context

Social protection systems are generally well-developed in the EU: they are designed to protect people (to some degree) against the risks and needs associated with unemployment, parental responsibilities, sickness/health care and invalidity/disability, the loss of a spouse or parent, old-age, housing and other forms of social exclusion.

The main policy framework in this domain concerns the open method of coordination (OMC) for social protection and social inclusion, which aims to promote social cohesion and equality, through adequate, accessible and financially sustainable social protection systems and social inclusion policies. A Communication from the European Commission ‘Working together, working better: a new framework for the open coordination of social protection and inclusion policies in the European Union’ (COM(2005) 706 final) outlines the objectives, which include:

  • making a decisive impact on the eradication of poverty and social exclusion;
  • providing adequate and sustainable pensions;
  • ensuring accessible, high-quality and sustainable healthcare and long-term care.

On 18 November 2015, the High Representative for Foreign Affairs and Security Policy and the European Commission jointly presented a review of the European Neighbourhood Policy (SWD(2015) 500 final) which underlined a new approach for the EU in relation to its eastern and southern neighbours, based on stabilising the region in political, economic, and security-related terms.

In cooperation with its ENP partners, Eurostat has the responsibility ‘to promote and implement the use of European and internationally recognised standards and methodology for the production of statistics, necessary for developing and monitoring policy achievements in all policy areas’. Eurostat undertakes the task of coordinating EU efforts to increase the statistical capacity of the ENP countries. Additional information on the policy context of the ENP is provided here.

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Population and social conditions (enpr_ps)
ENP countries: living conditions (enpr_psilc)
People at risk of poverty or social exclusion (Europe 2020 strategy) (ilc_pe)
Income distribution and monetary poverty (ilc_ip)
Living conditions (ilc_lv)