INDICATORS OF POVERTY AND SOCIAL EXCLUSION, 2020

The Survey on Income and Living Conditions is the basis for the calculation of the indicators of poverty and social exclusion for the Republic of Croatia. The implementation of the Survey is in line with EU regulations and Eurostat`s methodology for the EU-SILC Survey. At the EU level, SILC is an obligatory survey and a reference data source for the monitoring of income, poverty and social exclusion statistics. SILC is carried out in all Member States on a regular annual basis.

Due to the extraordinary circumstances during 2020 caused by the COVID-19 pandemic, the Central Bureau of Statistics faced difficulties in collecting EU-SILC data. Adaptation to the new situation and partial mitigation of difficulties was achieved by extending the time of data collection, but also by applying the so-called CATI method along with the usual CAPI survey, which includes interviewers’ visits to households.

The indicators are based on the concept of relative poverty, which takes into consideration the household disposable income, the number of household members (household size) and the income distribution within the population. The main indicator is the at-risk-of-poverty rate, which represents a percentage of persons with the equivalised total disposable income below the at-risk-of-poverty threshold. The at-risk-of-poverty rate does not show the actual number of poor people, but rather how many of them have an income below the at-risk-of-poverty threshold. The at-risk-of-poverty threshold is determined as 60% of the middle value (median) of the equivalised disposable income of all persons.

According to the Survey data, the at-risk-of-poverty rate in 2020 was 18.3%.

The at-risk-of-poverty threshold for a one-person household amounted to 35 124 kuna per year in 2020, while for a household consisting of two adults and two children younger than 14 it was 73 761 kuna per year.

The People at risk of poverty or social exclusion indicator refers to persons who are at risk of poverty, or severely deprived, or living in a household with a low work intensity. According to this indicator for 2020, there were 23.2% of persons in that position in the Republic of Croatia.

The severe material deprivation rate presents the percentage of persons who live in households that cannot afford at least four of nine deprivation items. In 2020, it was 6.9%.

The People living in households with very low work intensity indicator refers to persons (aged 0 – 59) living in households with a work intensity lower than 0.2. In 2020, it amounted to 8.6%.

The comparison between the standard at-risk-of-poverty rate and the at-risk-of-poverty rate before social transfers shows that the exclusion of social transfers from the income caused an increase in the percentage of persons at risk of poverty, from the standard 18.3% rate to the 23.8% rate. When both social transfers and pensions had been excluded from the income, the at-risk-of-poverty rate reached 39.3%.

At-risk-of-poverty rate established according to the at-risk-of -poverty threshold from 2012 is an indicator that takes into account the changes in the costs of living and has been calculated on the basis of deflated at-risk-of-poverty threshold from 2012. That rate amounted to 9.2% in 2020 and implies that a smaller number of people were at risk of poverty in 2020 than in 2012, when the at-risk-of-poverty rate was 20.4%.

Average disposable income per household was 113 516 kuna in 2020, while the average equivalised disposable income amounted to 64 114 kuna.

The sample size, on which basis the 2020 Survey was conducted, provides data for calculating statistically reliable indicators at the level of the Republic of Croatia and at lower spatial levels, at NUTS 2 level –Adriatic Croatia and Continental Croatia.

At-risk-of-poverty rate in 2020 was equal to the Republic of Croatia rate, that is 18,3% for Adriatic Croatia and Continental Croatia.

In 2020, the People at risk of poverty or social exclusion indicator amounted to 24.0% for Adriatic Croatia and to 22.9%. for Continental Croatia.

The at-risk-of-poverty rate, by age and sex, was the highest for persons aged 65 years or over and amounted to 31.0% in 2020. The difference by sex was the highest in this age group and amounted to 34.6% for women and to 25.8% for men. The lowest at-risk-of-poverty rate was recorded for persons aged from 18 to 24 and amounted to 12.5%. In this age group, it amounted to 12.0% for men and to 12.9% for women.

The at-risk-of-poverty rate, by the most frequent activity status, was calculated for persons aged 18 or over. The most frequent activity status is the one a person had for at least seven months in the reference period.

In 2020, the at-risk-of-poverty rate by the most frequent activity status was the highest for unemployed persons and amounted to 45.3%. It was 52.0% for unemployed men and 39.2% for unemployed women. The lowest at-risk-of-poverty rate by the most frequent activity status was recorded for employees, 4.1%. It amounted to 3.7% for female employees and 4.5% for male employees.

The at-risk-of-poverty rate, according to the household type, was calculated for the categories of households without dependent children and with dependent children.

Within the category of households with no dependent children, the highest at-risk-of-poverty rates in 2020 were recorded for one-person households, particularly for households consisting of persons aged 65 or over, 52.1%, and for single female households, 50.4%.

Within the category of households with dependent children, the highest at-risk-of-poverty rates were recorded for households consisting of a single parent with dependent children, 30.5%, and for households with two adults with three or more children, 23.1%.

At-risk-of-poverty rate by work intensity of a household was calculated for households without dependent children and households with dependent children for persons aged 0 – 59.

The at-risk-of-poverty rate by work intensity in 2020 was the highest for households with very low work intensity. Thus, for households with dependent children it amounted to 75.5%, while for households without dependent children it amounted to 58.1%. Very low work intensity refers to the situation of persons living in households where nobody works or works very little, meaning that working-age household members work up to 20.0% of the total number of months they could have worked in the reference period.

Material deprivation refers to indicators showing material conditions affecting the quality of life of the households.

In 2020, according to the Survey data, there were:

- 5.7% of persons living in households that could not afford to keep home adequately warm during the coldest months

- 49.3% of persons living in households that could not afford a one-week annual holiday away from home for all household members

- 7.8% of persons living in households that could not afford a meal with meat, chicken, fish (or a vegetarian equivalent) every second day

- 48.9% of persons living in households that could not face unexpected financial expenses from own resources (2 500 kuna)

- 14.2% of persons living in households who were in arrears with mortgage or rent payments, utility bills or hire purchase in the last 12 months due to financial difficulties

- 11.1% of persons living in households that made ends meet with great difficulty, 22.2% of persons living in households that made ends meet with difficulty and 45.2% of persons living in households that made ends meet with some difficulty. The lowest percentage of persons (1.0%) lived in households that made ends meet very easily.

 

The material deprivation rate presents the percentage of persons who live in households that cannot afford, exclusively due to lack of financial resources, at least three of nine deprivation items. The material deprivation rate in 2020 for the Republic of Croatia was 17.4%.

The intensity of material deprivation indicates the mean number of material deprivation items per person, which amounted to 3.6 in 2020. It is calculated for persons who cannot afford at least three of nine deprivation items.

The quintile share ratio (S80/S20) is an indicator of income inequality and it measures the ratio in the top and bottom quintiles. It represents the ratio between the total equivalised income of the 20.0% of population with the highest income and the 20.0% of population with the lowest income. This ratio reached 4.6 in 2020, which means that 20.0% of the population with the highest equivalised disposable income received 4.6 times as much income as 20.0% of the population with the lowest equivalised disposable income.

Gini coefficient is a measure of income inequality distribution and in 2020 it was 28.3%. If there were a perfect equality, that is, if each person received the same income, the Gini coefficient would be 0%. The closer to 100% the value is, the greater the income inequality.

The relative at-risk-of-poverty gap is the difference between the at-risk-of-poverty threshold and the equivalised income median of persons below the at-risk-of-poverty threshold. In 2020, it was 28.0%.

The dispersion around the at-risk-of-poverty threshold indicates the percentage of persons at the risk of poverty in case when the at-risk-of -poverty threshold is set at 40%, 50% and 70% of the equivalised income medians. In 2020, the at-risk-of-poverty rate was 7.3% for the threshold set at 40% of the median, 12.5% for the threshold set at 50% of the median and 25.3% for the threshold set at 70% of the equivalised income median.

The at-risk-of-poverty rate by tenure status in 2020 was higher for tenants, amounting to 24.5%, than for owners or rent-free occupants, for which that rate amounted to 18.1%.

The comparison of the poverty indicators for EU countries and for the Republic of Croatia in 2020 is given in table 9. All indicators were calculated on the basis of data collected in the EU-SILC Survey.

1) Provisional data

2) Data not available

The comparison of some poverty indicators, according to data available for 2020 between the EU countries, given in table 9., shows that:

- The highest at-risk-of-poverty rates were recorded in Bulgaria (23.8%), followed by Romania (23.4%), Spain (21.0%), Lithuania (20.9%) and Estonia (20.7%), where more than a fifth of the country’s population had an equivalised total disposable income below the at-risk-of-poverty threshold. In Croatia, the at-risk-of-poverty rate amounted to 18.3%.

- The lowest at-risk-of-poverty rates were recorded in Denmark (12.1%), Finland (12.2%), Hungary (12.3%) and Slovenia (12.4%).

- The most people at risk of poverty or social exclusion were recorded in Bulgaria (32.1%), Romania (30.4%) and Greece (28.9%), while the fewest people in such a position were recorded in Slovenia (15.0%), Denmark (15.9%) and Finland (16.0%). According to this indicator, there were 23.2% of people at risk of poverty or social exclusion in Croatia.

- The inequality of income distribution defined by the quintile share ratio (S80/S20) was the highest in Bulgaria (8.0), Romania (6.6) and Lithuania (6.1), which indicates that, for example, 20.0% of the population in Bulgaria with the highest equivalised disposable income received 8.0 times as much income as the 20.0% of the population with the lowest equivalised disposable income. The indicator of income inequality distibution for Croatia was 4.6. The lowest inequality of income distribution was recorded in Slovenia (3.3), Belgium (3.7) and Finland (3.7).

NOTES ON METHODOLOGY

Data source

The poverty indicators for the Republic of Croatia presented in this First Release were calculated by using data collected in the Statistics on Income and Living Conditions, which was carried out in 2020 (SILC 2020). It is an annual survey that is carried out on the random sample of private households. According to the methodology, institutional households (such as homes, prisons, hospitals for the permanent accommodation of patients etc.) are not covered, and neither is the population of islands that form a specific spatial unit due to lower accessibility, except for islands that are connected to the mainland by a bridge (Krk, Čiovo, Vir, Murter and Pag).

The survey collects data on gross and net income of households and all household members, data on education status of persons, activity status and employment, health care and childcare, data on financial and material status of households and data on other aspects of living standards of households. The Statistics on Income and Living Conditions was introduced in the statistical system of Republic of Croatia in 2010 and is in line with EU regulations and Eurostat's methodology for the EU-SILC survey. On the EU level, the SILC is an obligatory survey and presents a reference data source that provides for the monitoring and comparability of the income, poverty and social exclusion statistics.

Data collection and the impact of the COVID-19 pandemic

Data are collected by using the CAPI method, which is done by using a personal computer for data entry, that is, the electronic questionnaire. The field work is carried out by specially educated interviewers.

In view of the extraordinary situation of COVID-19 pandemic, the Croatian Bureau of Statistics takes all necessary measures to prevent the spread of infection, so during 2020, household interviewing was mainly carried out by phone, i.e., by applying the so-called CATI method.

The interviewers’ work is organised by the Croatian Bureau of Statistics, which checks, processes and tables the data collected. Outcome is published at the annual level.

Reference periods to which data refer are defined by type of collected data. The reference period for income data, the most important part of this survey, is the previous calendar year, which makes the year 2019 the reference period for the SILC 2020 survey on income data. For other data, the reference period is different, for example, the previous month from the time of the interview, previous 6 months, current period, previous 12 months etc.

According to the Official Statistical Act (NN, No. 25/20), the confidentiality of all personal data on the household and its members given by respondents is guaranteed. The collected data are used solely for statistical purposes and they are published at the aggregate level.

Definitions

Household is every family or other community of individuals who live together and jointly spend their income in order to meet the basic existential needs (accommodation, food, etc.). A household is also considered every person who lives alone (one-person household).

Total disposable income of a household is the total net income received by household and all its members during the reference period, which is the previous year. It includes the income from paid employment, the income from self-employment, the property income, pension, social transfers and other receipts received from persons who are not household members.

Equivalised disposable income is calculated in a way that the total disposable household income is divided by equivalised household size calculated according to the modified OECD scale, 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. This procedure is applied in order to allot equal share to each member with respect to joint earnings.

The at-risk-of-poverty threshold is determined by calculating the equivalised income per household member for all households. After that, the middle value (median) of the income distribution is determined and 60% of the median is determined as the risk-of-poverty threshold. Persons with the income below the threshold are at higher risk of poverty than others, but do not necessarily live in deprivation. The at-risk-of-poverty threshold is presented in kuna.

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

At-risk-of-poverty rate established according to the at-risk-of-poverty threshold from 2012 is defined as the percentage of persons whose equivalised disposable income in 2020 was below the at-risk-of-poverty threshold in 2012, which has been adjusted for inflation.

People at risk of poverty or social exclusion is an indicator that represents persons (as percentage of persons in total population) who are at risk of poverty or severely materially deprived or living in a household with very low work intensity.

The at-risk-of-poverty rate before social transfers is calculated by excluding social transfers and pensions when defining an income. This indicator is used in combination with a standard at-risk-of-poverty rate in order to evaluate the impact of social transfers on the risk of poverty.

The common classification of territorial units for statistics (NUTS) is a statistical standard used for collection, entering, processing, analysis and dissemination of regional statistics according to the spatial distribution levels of the Republic of Croatia. Spatial units for statistics at NUTS 2 level are Adriatic Croatia and Continental Croatia.

Adriatic Croatia encompasses the following counties: Primorje-Gorski kotar, Lika-Senj, Zadar, Šibenik-Knin, Split-Dalmatia, Istria and Dubrovnik-Neretva.

Continental Croatia encompasses the following counties: the City of Zagreb, Zagreb, Krapina-Zagorje, Varaždin, Koprivnica-Križevci, Međimurje, Bjelovar-Bilogora, Virovitica Podravina, Požega-Slavonia, Slavonski Brod-Posavina, Osijek-Baranja, Vukovar-Srimium, Karlovac and Sisak-Moslavina.

At-risk-of-poverty rate by most frequent activity status is calculated for persons aged 18 years and over according to the prevailing activity status in a reference period. The prevailing activity status of a person is the status which a person had for at least seven months in the reference period.

The work intensity of a household is the ratio of the total number of months that all working-age household members have worked during the income reference year and the total number of months the same household members theoretically could have worked in the same period. A working-age person is a person aged 18 – 59 years, with the exclusion of students in the 18 – 24 age group.

The work intensity is defined as: very low (0 – 0.2), low (0.2 – 0.45), medium (0.45 – 0.55), high (0.55 – 0.85) and very high (0.85 – 1). Very low work intensity refers to the situation of persons living in households where nobody works (or work very little), meaning that working-age household members work 20.0% or even less than the total number of months they could have worked in a referent period.

Dependent children include all persons aged below 18 as well as persons aged 18 to 24 years, living with at least one parent and economically inactive.

Inability to afford a one-week annual holiday away from home refers to households that cannot afford a one-week annual holiday away from home to its members due to financial difficulties. Holidays that include staying with friends or relatives, charge-free accommodation in their own cottage, summer house etc. is considered a vacation. If just one household member cannot go on holiday due to financial difficulties, it is considered that the whole household is unable to go on holiday. If a household borrow money from bank, friends, relatives etc. to pay a holiday, it is considered as it is payed from own resources.

Inability to afford a meal with meat, chicken, fish or vegetarian equivalent every second day refers to households that cannot afford a meal with meat, chicken, fish or vegetarian equivalent every second day solely due to financial difficulties.

Inability to face unexpected financial expenses refers to households that cannot pay unexpected financial expenses solely from own resources and without additional loans. The unexpected financial expense presents a monthly value of the at-risk-of-poverty threshold for one-person household in the previous year. In 2020, it amounted to 2 500 kuna. Additional debts imply that the household does not need any financial help from others (bank, friends etc.) and that it is not an issue of paying regular ongoing expenses. Unexpected financial expenses include, for example, expenditure for the repair of an extraordinary breakdown in the flat or the replacement of a durable good with a new one, etc.

Being in arrears with mortgage or rent payments, utility bills or hire purchase implies the percentage of persons living in households that paid some of these financial liabilities in the last 12 months after the due date or the due date of the invoice for payment solely due to financial difficulties. Mortgage or rent payments are related to the main dwelling of the household. Utility bills are bills for electricity, water, gas, heating, sewage removal and other bills connected with the dwelling in which the household lives. The exception are phone bills (fixed or mobile), which are not considered utility bills within this indicator.

Ability to make ends meet presents the househod's ability to regulary pay usual and necessary expenses in relation to the total income of all household members. The ability of the household is divided in the following six levels according to which the household declares itself: with great difficulty, with difficulty, with some difficulty, fairly easily, easily and very easily.

The material deprivation items concerned are the following:

1) being in arrears with mortgage or rent payments, utility bills, hire purchase instalments or other loan payments

2) inability to afford a one-week annual holiday away from home

3) inability to afford a meal with meat, chicken, fish or vegetarian equivalent every second day

4) inability to face unexpected financial expenses

5) inability to afford a telephone

6) inability to afford a colour TV

7) inability to afford a washing machine

8) inability to afford a car

9) inability of the household to pay for keeping its home adequately warm during the coldest months.

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.

The tenure status of a household is defined in relation to the housing unit in which the household was living at the time when the survey was performed, that is, in relation to their status with regard to that dwelling. In this respect, there are two different statuses: owner and tenant. The owner status includes households whose members are either owners or co-owners of the dwelling in which they live, with or without mortgage or obligation to repay the dwelling, or tenants that do not pay rent for the dwelling in which they live. The tenant status includes households that pay full (market) rent or reduced rent for the dwelling.

Design and sample size

The SILC survey is a panel sample survey of randomly chosen private households. The panel sample implies that selected households remain in the sample for four consecutive years and that they are repeatedly interviewed. The sample frame used in 2020 for the selection of dwellings occupied by private households was based on the Census of Population, Households and Dwellings in 2011 in the Republic of Croatia. The total sample consisted of 11 744 households. The sample selected for 2020 consisted of 7 716 successfully interviewed private households and the response rate at the household level was 69.42%.

 

Abbreviations

CAPI	computer-assisted personal interviewing
CATI	computer-assisted telephone interviewing
COVID-19	Corona Virus Disease-19
EU	European Union
EU-27	European Union (27 Member States)
Eurostat	Statistical Office of the European Communities
NUTS	common classification of territorial units for statistics
SILC	Statistics on Income and Living Conditions
NN	Narodne novine, official gazette of the Republic of Croatia
OECD	Organisation for Economic Co-operation and Development

Symbols

…	data not available

 

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