Tuesday, November 02, 2010

How well off are Estonia's pensioners?

A bit of number-crunching for you. I was just watching the new Have I Got News For You, and it mentioned that the new UK government was raising old-age pensions, to a flat rate of 140 pounds per week.

That's 20 pounds per day, or 600 pounds per month for ease of calculation - about 10 823 kroons. The Estonian statistics database tells me that the average old-age pension in Estonia was 4 766 EEK in the second quarter of 2010.

Of course, the cost of living is higher in the UK as well. I've yet to find a clear source of data for actual Purchasing Power Parity coefficients between countries, the closest data is GDP by PPP - and using absolute GDP numbers, you can use that to determine actual PPP factors. But an easier comparison is The Economist's Big Mac index. Here's the latest historical data: a Big Mac costs the equivalent of 3.68 USD in Britain, and 2.85 USD in Estonia. This gives us a factor of 1.29. So, the cost of living in the UK is 29% higher than in Estonia.

For a UK pensioner to have the same purchasing power in Estonia as they enjoy in the UK with this new increase, they would only need 8390 EEK. 

So on average, British pensioners are 76% better off than Estonian ones.

I'd love to compare working people's relative wealth as well, but the UK doesn't seem to be publishing good wage statistics - the closest I got was this, which is a bit out of date, and only reports gross numbers. If a reader can point me at a better source of numbers, I'd appreciate it.


Unknown said...

Well yes, but to keep the discussion in Estonian terms, most pensioners on the whole do not have a mortgage, since they own their properties. If you compare that situation with that of a family with an average salary paying a typical mortgage and child related stuff you will see that they have less than those 4,800 EEK left each month. You might say that both parents work, or at least one has a state child support (300 EEK per month). Well yes, but a pair of pensioners will therefore have over 9,000 EEK, mostly free, even if you take off communal charges (that not all have to pay), you still end up with around 7,500 EEK per month. Add to that the fact that pensions only rise and do not fall (as salaries have), as is guaranteed in Estonian law, and that all politicians and political parties pander to the pensioners as recently admitted by Siim Kallas, and you will see that there is a particular demographic group that does hold the power in our dear Eesti.

antyx said...

I agree that pensioners are a demographic that gets a lot of attention from politicians (but remember, that's because they vote - and younger people don't; if you're unhappy, make your voice heard).

I would find it a very difficult argument to say that pensioners in Estonia are doing well, though. Even discounting mortgages. 7500 a month for two people is not a lot of money. I guess pensioners do tend to cook at home, have more free time to shop at cheaper but less convenient places, etc. - but life on nothing more than the national old-age pension is not pleasant.

As for working families and falling salaries, there's always my standard right-wing answer: work harder, and learn new skills.


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