POVERTY INDICATORS, 2001 - 2003

Poverty indicators are calculated on the basis of data on total net income of a household and all household members, which was defined by the Household Budget Survey for the years 2001, 2002 and 2003. The Survey is carried out on the random sample of private households and the sample is separately defined for each year, i.e. there is not a panel part of the sample (households were not repeatedly interviewed every year).

The at-risk-of-poverty rate is the percentage of persons living in household where the equivalised total net household income is below the at-risk-of-poverty threshold and in 2003 the rate was 16.9%, while in 2002 it was 18.2% and in 2001 it was 17.2%.

The at-risk-of-poverty threshold is determined relatively, based on the distribution of income and in 2003 the annual level for a one-person household amounted to 18 895.88 kuna and 39 981.35 kuna for a household consisting of two adults and two children. Persons living under the threshold are in a worse situation than others but they do not necessarily live in deprivation.

1. POVERTY INDICATORS OF CROATIA

	Income, 2001		Income, 2002		Income, 2003
	With income in kind	Without income in kind	With income in kind	Without income in kind	With income in kind	Without income in kind
At-risk-of-poverty rate, %	17,2	20,5	18,2	21,9	16,9	18,9
At-risk-of-poverty threshold for one-person households Kuna	17 965,52	15 240,23	19 253,86	16 809,60	18 895,88	17 376,04
At-risk-of-poverty threshold for households consisting of two adults and two children, Kuna	37 727,60	32 004,49	40 433,10	35 300,16	39 681,35	36 489,68
At-risk-of-poverty rate by age and sex, %
Men	15,4	19,1	17,7	21,6	15,8	17,7
Women	18,7	21,8	18,6	22,2	17,9	20,1
0 - 15 years	15,9	21,3	16,7	21,7	15,2	16,6
Men	13,9	20,3	17,9	22,9	15,6	16,4
Women	18,0	22,5	15,4	20,3	14,7	16,7
16 - 24 years	15,2	18,3	16,4	20,4	15,4	17,2
Men	16,9	19,3	19,0	24,4	16,2	17,0
Women	13,6	17,3	13,5	16,1	14,6	17,3
25 - 49 years	13,3	17,5	13,9	17,6	12,5	14,2
Men	12,6	17,3	14,0	17,4	12,4	14,0
Women	14,0	17,8	13,7	17,8	12,7	14,3
50 - 64 years	14,7	17,0	17,6	21,3	15,5	16,7
Men	13,8	15,9	16,9	21,2	15,4	16,7
Women	15,5	18,0	18,3	21,4	15,5	16,6
65 years and over	28,5	29,7	29,0	31,6	27,9	32,2
Men	23,5	24,9	25,6	27,8	23,6	28,6
Women	31,8	32,9	31,2	34,0	30,6	34,4
At-risk-of-poverty rate by most frequent activity status, %
Employed	5,2	5,5	5,8	6,5	5,2	5,6
Men	6,0	5,9	6,6	6,9	6,0	6,6
Women	4,1	5,1	4,9	5,9	4,3	4,3
Self-employed	20,1	38,0	19,0	37,6	18,4	25,5
Men	20,0	39,5	17,3	38,3	16,8	22,8
Women	20,2	35,8	21,0	36,8	20,1	28,5
Unemployed	32,2	32,6	35,0	38,1	32,4	34,1
Men	35,6	32,8	42,5	45,2	39,7	40,6
Women	29,6	32,5	28,1	31,5	26,6	28,9
Retired	21,3	19,8	23,2	24,0	20,7	22,4
Men	19,4	19,5	23,7	24,0	20,3	23,3
Women	22,9	20,0	22,9	23,9	21,0	21,7
Other economically inactive	20,0	25,5	21,3	26,1	20,3	22,6
Men	15,8	21,0	19,5	24,8	17,7	18,8
Women	22,7	28,5	22,7	27,2	22,0	25,1
At-risk-of-poverty rate by household type and age, %
One-person household	33,3	31,1	35,1	38,3	34,7	37,3
Men	22,4	21,6	28,6	34,8	28,3	32,0
Women	36,7	34,0	37,5	39,6	37,3	39,4
One-person household, 30 - 64 years	26,1	24,5	26,2	30,6	(24,7)	26,5
One-person household, 65 years and over	40,4	37,1	41,2	43,6	41,8	44,9
Two adults, no dependent children, both adults under 65 years	11,9	14,8	16,3	21,0	11,8	13,3
Two adults, no dependent children, at least one adult 65 years or over	27,5	27,3	30,1	32,8	26,1	30,4

1. POVERTY INDICATORS OF CROATIA

(contiuned)

	Income, 2001		Income, 2002		Income, 2003
	With income in kind	Without income in kind	With income in kind	Without income in kind	With income in kind	Without income in kind
Other households without dependent members	9,7	15,9	9,4	11,0	9,3	11,1
Single parent household, one or more dependent children	28,9	27,1	27,7	36,6	(29,1)	(31,8)
Two adults, one dependent child	13,0	14,3	11,2	14,5	14,9	14,7
Two adults, two dependent children	14,9	19,3	12,8	16,8	13,7	15,2
Two adults, three or more dependent children	15,9	30,0	24,9	32,1	19,1	21,6
Other households with dependent children	16,8	19,0	15,0	18,4	13,0	15,2
At-risk-of-poverty rate by tenure status, %
Tenant (contracted, fixed and full rent)	20,7	17,2	18,9	18,5	20,2	20,2
Owner or rent free	17,0	20,7	18,1	22,1	16,8	18,9
Inequality of income distribution - quintile share ratio (S80/S20)	4,3	5,5	4,5	5,4	4,4	5,0
Gini coefficient	0,28	0,31	0,29	0,31	0,29	0,30
Relative at-risk-of-poverty gap, %	22,7	32,7	23,2	28,7	21,1	24,2
Dispersion around the at-risk-of-poverty threshold
40%	5,8	10,7	6,3	9,8	5,2	6,8
50%	10,5	15,3	11,7	15,4	10,2	12,1
70%	24,1	27,5	26,0	29,7	24,6	25,7
At-risk-of-poverty threshold before social transfers, %
Social transfers excluded from income	34,7	38,8	33,7	38,2	33,3	35,3
Pensions and social transfers excluded from income	42,9	47,4	40,0	45,0	42,3	43,8

Poverty indicators have been calculated on the basis of two definitions of net income calculation, depending on whether the income includes both cash earnings and benefits in kind earnings (see Table 1, column containing item “With income in kind”) or cash earnings only (see Table 1, column containing item “Without income in kind”), in order to present the influence of benefits in kind on income and, consequently, on the at-risk-of-poverty rate and the at-risk-of-poverty threshold.

The quintile share ratio (S80/S20), which registers changes in the upper and lower quintiles of equivalised income, amounted to 4.4 in 2003 while in 2002 it was 4.5

The Gini coefficient, as a measure of the inequality of income, takes into consideration the total distribution of income. In 2003 it hasn't changed. It is still 0.29 as in 2002.

The relative at-risk-of-poverty gap, fell from 23.2% in 2002, to 21.1% in 2003 which shows that difference between the at-risk-of poverty threshold and the equalised median of persons below the at-risk-of-poverty threshold decreased.

Data on indicators of dispersion around the at-risk-of-poverty threshold lead to the conclusion that rather large number of persons is located over 60-percent threshold, which resulted in the fact that the 70-percent risk rate was significantly higher. It can be well seen in the difference between 16.9% and 24,6% persons, which makes the difference of 7.7% persons in the year 2003. This difference was somewhat higher in the year 2002 and amounted to 7.8% persons.

The at-risk-of-poverty rate before social transfers, when social transfers are excluded from the income, is 33.3% in 2003 while in 2002 it was 33.7%. The at-risk-of-poverty rate before social transfers, when pensions and social transfers are excluded from the income, is 42.3% in 2003 and 40.0% in 2002.

2. COMPARISON OF THE REPUBLIC OF CROATIA AND EU MEMBER COUNTRIES¹⁾

	Poverty indicators (without income in kind)
	At-risk-of-poverty rate	Quintile share ratio (S80/S20)	Gini coefficient	Relative at-risk-of-poverty gap	Social transfers excluded from income	Pensions and social transfers excluded from income
Croatia
2001.	21	5,5	0,31	33	39	47
2002.	22	5,4	0,31	29	38	45
2003.	19	5,0	0,30	24	35	44
EU 25	15	4,4	0,28	22	24	40
EU 15	15	4,4	0,28	22	24	39
Belgium	13	4,0	0,28	15	23	38
Denmark	11	3,1	0,22	13	21	31
Germany	11	3,6	0,25	19	21	39
France	15	4,0	0,27	19	24	40
Greece	20	5,7	0,33	28	23	39
Italy	19	4,8	0,29	28	22	42
Ireland	21	4,5	0,29	24	30	36
Luxembourg	12	3,8	0,27	17	23	40
Netherlands	11	3,8	0,26	20	21	36
Austria	12	3,5	0,24	19	22	38
Portugal	20	6,5	0,37	22	24	37
Finland	11	3,5	0,24	17	19	30
Great Britain	17	4,9	0,31	23	29	40
Spain	19	5,5	0,33	24	23	37
Sweden	10	3,4	0,24	17	27	43
Estonia^2)	18	6,1	0,35	24	25	42
Czech Republic^2)	8	3,4	0,25	16	18	36
Cyprus^2)	16	4,4	0,29	24	18	24
Latvia^2)	16	5,5	0,34	20	24	43
Lithuania^2	17	4,9	0,32	22	24	41
Hungary^2)	10	3,4	0,23	16	20	44
Malta^2)	15	4,5	0,30	18	21	30
Poland^2)	15	4,5	0,30	22	30	48
Slovenia^2)	11	3,2	0,22	18	17	37
Slovakia^2)	5	2,7	0,21	12	19	34

Source: Eurostat – New Cronos

1) The referent year for the all EU countries is 2001, except for Cyprus (1997), Latvia (2002), Malta (2000), Slovenia (2000) and Slovakia (2003) for wich the data are imputed.

2) Countries which became a member states of European Union on 1^st May 2004.

NOTES ON METHODOLOGY

The data source

Poverty indicators for Croatia have been calculated using data collected through the Household Budget Survey for 2001, 2002 and 2003. The Survey is carried out on the random sample of private households and the sample is separately defined for each year, i.e. there is not a panel part of the sample (households were not repeatedly interviewed every year).This kind of sample design does not allow tracking of occurrence through time.

Poverty indicators for EU countries have been taken over from the NewCronos database.

Definitions

The poverty indicators or Laeken indicators were adopted at the Laeken European Council in December 2001. The list contains 18 indicators covering the following areas: financial poverty, employment, health and education. This First Release presents monetary indicators of poverty.

The Eurostat methodology «Laeken Indicators, Detailed Calculation Methodology", Luxembourg 2003, was used in calculations of poverty indicators for the Republic of Croatia.

Total income of household is the total net income received by household and all its members. It includes income from paid employment, income from self-employment, property income, pensions (old-age or survivors’), social transfers, other transfers received from persons who are not household members. Total income excludes transfers paid to other household and imputed rent.

The indicators were calculated on the basis of two income definitions. According to the first one, the income includes cash earnings and benefits in kind, such as value of goods consumed from own production and other benefits in kind (income from work carried out for benefits in kind, gifts received in kind, personal use of company car). According to the other definition, income includes only cash earnings.

Adult equivalent is a measure by which all members of a household are reduced to an adult. This procedure is applied in order to allot equal share to each member with respect to joint earnings. For that purpose there are various equivalence scales, differing in coefficients they use. In the calculation of poverty indicators the modified OECD scale was used, in which the household head is given coefficient 1, every other adult aged 14 and over is given coefficient 0.5, and every child under 14 years of age is given coefficient 0.3.

Equivalised income is calculated in the way that the total household income is divided by equivalised household size according to the modified OECD scale.

At-risk-of-poverty rate is the percentage of persons whose equivalised net income is below the at-risk-of-poverty threshold.

At-risk-of-poverty threshold is defined as 60% of median net income of all households. At-risk-of-poverty threshold is determined relatively, based on the distribution of income. Therefore it does not measure so much poverty itself but the inequality among population.

At-risk-of-poverty rate before social transfers shows the percentage of the population having an equivalent net income before social transfers below the at-risk-of-poverty threshold. Two definitions of the income have to be taken into account at this indicator, depending on whether pensions are considered social transfers or not. This indicator should be used in connection with the at-risk-of-poverty rate after social transfers in order to evaluate the impact of social transfers.

Social transfers include unemployment benefits, child allowance, maternity leave benefits, layette assistance, compensations for sick-leave of 42 or more days, allowance for physical injury and nursing by other person, social welfare payments, compensation for the rehabilitation or employment of disabled persons, disability pensions (domestics or from abroad), scholarships or educational allowances, funds received from other persons for housing expenses.

Quintile share ratio (S80/S20) is the ratio between an average equivalised household income of 20% persons with the highest income and 20% persons with the lowest income.

Gini coefficient is a measure of income inequality, which takes into account the full distribution of income. Its value ranges between 0 and 1. The higher it is the greater is the income inequality.

Relative at-risk-of-poverty gap is the difference between the at-risk-of-poverty threshold and equivalised income median of persons below the at-risk-of-poverty threshold, expressed as a percentage of the at-risk-of-poverty threshold.

Abbreviations

EU European Union

OECD Organization for Economic Co-operation and Development

Symbols

( ) insufficiently reliable estimate