DEVELOPMENT

hand, to the “inequality of access,” or whether people
have similar or differing opportunities for earning
a living, and on the other hand, to the result of that
inequality, which is expressed in actual differences in
incomes (Plotnik, 2008).
Material and educational inequality is also explored
in another chapter of this report, and therefore, the focus
in this chapter is on the equality, or inequality, of the
results – income inequality, the working poor, and the
gender pay gap. Considering the conditions in Estonia,
it would undoubtedly be important to add an ethnicity-based
analysis to the gender-based analysis of income
inequality; however, the comparative data in this regard
is difficult to collect, for various reasons, and therefore, it
will not be included.
The main sources for the statistical information are
international organisations, primarily the Organisation for
Economic Co-operation and Development (OECD), the
United Nations (UN) and Eurostat. In addition, data from
the Social Inequality Survey, organised by the International
Social Survey Programme (ISSP), is included (ISSP
Research Group, 2013). This comparative survey, which
is based on a uniform methodology, was conducted in
40 states around the world, including Estonia, and the
data collection lasted from the autumn of 2008 to January
of 2012 (in most states, the survey was conducted
between 2009 and 2010). In each state, a representative
sample was surveyed, which means that between 900
and 3,300 people were queried in one state (in most of
the states, the number of respondents was about 1,000).
Attention should be paid to the fact that, despite the careful
harmonisation of the methods and principles of data
collection, the questions may mean different things to
respondents in different social contexts. Therefore, in the
case of surveys with such a global reach, it is especially
important to try and interpret the results based on the
economic and social environment of the specific state in
order to better understand the background of the international
differences.
Figure 3.2.1
Estonia’s Gini Index, from 2005 to 2011. Source: Statistics
Estonia (the zero point of the axis is close to 0.277,
the Gini level for 1989)
Gini index
0.335
0.325
0.315
0.305
0.295
0.285
0.275
2005
2006
2007
2008
2009
2010
2011
3.2.2
Income differences and people’s assessment
thereof
Examinations have been made of social stratification
and, changes therein, in the transition states (Evans,
Kelley, Kolosi, 1992; Evans, Kelley, 2004; Saar, 2010;
Saar, 2011), and these reflect the different aspects of
inequality and their changes in time. The analyses show
that, by the end of the economic boom, Estonia had
become a society with greater inequality. Although, in
the dominant ideology, an attitude prevails that inequality
is a characteristic feature of a market economy, a
large part of the population does not share this position.
From the viewpoint of social justice, it can be said
that the Estonian society’s sense of fairness has been
offended (Plotnik, 2008).
A thorough overview of the income differences,
starting at the beginning of the transition period, is
included in the 2009 Estonian Human Development
Report (Paškov, Kazjulja, 2010), and there is no reason
to include the entire time series here. However, let us
recall that the Gini coefficient, which shows income
inequality, increased in the years between 1989 and
1995 from 0.277 to 0.396, and remained high for 10
years (0.358), and then decreased to 0.309, by 2007.
Therefore, income inequality has demonstrated strong
growth in Estonia, but started to decline somewhat once
the economic boom ended. What happened during the
economic crisis? In Figure 3.2.1, where the zero point is
the 1989 level of inequality (0,277), we see that, since
2007, the level of inequality has started to climb sharply
again, and reached 0.326 by 2011. Therefore, the level of
income equality changes very rapidly.
In order to give substance to these numbers, it
is useful to look at the variance of the Gini Index by
state. The Gini Index value is between 0 and 1 – with
0 being a totally equal society, and 1 being a totally
unequal society. The difference in Gini indicators,
for the European states, remains within 0.16 points,
which shows that, although various policies may be
implemented in a space with similar cultural, social
and political traits, generally, there is little difference
in inequality. Costa Rica, Chile and Uruguay are also
very similar, as are Singapore, Mexico and the U.S. The
inequality in these Asian and South American countries
is greater than in Europe.
Income inequality is measured more exactly in
two ways – income is differentiated before and after
social transfers. First, the differences in market-based
income are measured, which depend on whether the
person works at all, on pay differences, the number
of family members being supported, etc. In order to
level the differences resulting from the labour market
and the nature of the household, most societies provide
a social protection system, which also includes the
payment of supports and benefits to the weaker members
of society. Therefore, it is useful to measure the
differences in incomes after social transfers, i.e. after
deducting taxes and adding social benefits, pensions,
etc. At the end of the 2000s, in the European states,
Sweden had the lowest indicator for income inequality
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