Living Standards Measurements Study - Serbia 2002 - 2007

1. POVERTY PROFILE IN SERBIA IN THE PERIOD
FROM 2002-2007
This Chapter presents results on the extent and
profile of poverty in Serbia in 2007 as well as the
changes that have occurred between 2002 and 2007.
The poverty line for Serbia has been derived on the
basis of the 2007 LSMS of Serbia. The methodology
for deriving the poverty line and welfare aggregate is
presented in Chapter 12.
1.1. Key poverty indicators
A considerable and continuous economic growth
since 2000, along with a real salary increase (which
exceeded the gross domestic product - GDP growth),
and also the growth of pensions and other social
transfers, as well as other citizens' incomes, especially
the growth of foreign remittances, led to substantial
poverty decline in Serbia in the 2002-2007 period.
However, the stagnation in the number of the
employed and a high unemployment rate have
certainly down-sized the influence that the economic
growth may have had on the poverty reduction had it
been accompanied with an increase in employment
and a decline in the unemployment rate.
According to the LSMS data, poverty in Serbia
considerably decreased in the 2002-2007 period. The
number of the poor was split in half in 2007 as
compared to 2002 (Table 1). Thus, the key objective
the Government had set in its Poverty Reduction
Strategy to have the poverty in Serbia halved by 2010
was reached as early as 2007.
In 2002, 14 percent or approximately one
million people were poor, compared to 6.6 percent or
some 490 000 in 2007. The total number of the poor
was thus decreased by more than 500 000. All
persons whose consumption per adult equivalent was
lower than the poverty line on average, which
amounted to 5 234 and 8 883 dinar monthly per adult
equivalent in 2002 and 2007 respectively, were
considered poor. Extreme poverty was close to zero,
given that only a negligible fraction of the population
(i.e. Roma) had consumption below the food poverty
line which equalled 2 764 and 4 138 dinars monthly
per adult equivalent, in 2002 and 2007 respectively.
The remaining two poverty indicators, the depth
and severity of poverty, which reflect the poverty
distribution, also decreased in this period. The depth
(gap) of poverty in 2007 amounted to 1.3 percent,
which suggests that should the state deploy the funds
in the amount of 1.3 percent of the poverty line for
every person (the poor and those who are not poor)
and allocate it to the poor (in addition to the funds
already allocated to the most affected categories),
poverty would be eliminated in theory, under the
assumed perfectly targeted aid to the poor. The
severity of poverty, the indicator which takes into
account the fact that some of the poor are deeper in
poverty than the others, i.e. further below the poverty
line (giving them more weight), equalled 0.4 percent.
Table 1.1. Key poverty indicators in Serbia, 2002-2007
(standard errors are presented in brackets)
2002 2007
Absolute poverty line per adult equivalent, in dinars 5 234 8 883
Percentage of the poor 14.0 6.6
(0.74) (0.61)
Depth of poverty, percent 3.0 1.3
(0.20) (0.17)
Severity of poverty, percent 1.0 0.4
Source: LSMS 2002 and 2007.
(0.08) (0.07)
10 Living Standards Measurements Study - Serbia 2002 - 2007