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118 Figure 3.2.5 Ranking of countries based on how large a percentage of their workers find that they get less pay than they deserve, and the percentage of working poor in the European countries before the global economic crisis (2007), and during the crisis (2011). I earn much less than I really deserve (2010) Working poor (2007) Working poor (2011) Percentage 0 5 10 15 20 25 30 35 Switzerland Norway Belgium Denmark Austria South Korea New Zealand West Germany Iceland Spain Cyprus China Finland South Africa Taiwan Great Britain Australia Sweden USA Slovenia France Israel Portugal Venezuela Japan Italy Croatia East Germany Latvia Turkey Philippines Slovakia Bulgaria Czech Republic Estonia Hungary Poland Argentina Chile Ukraine Russia Percentage 0 5 10 15 20 25 30 35 Source: ISSP 2009 Social Inequality; Eurostat. Estonian Human Development Report 2012/2013 what causes dissatisfied attitudes in society. The next diagram provides a general picture of the direction of the changes in inequality, by state. The diagram shows (1) the changes in the Gini coefficient from the mid- 1990s to the mid-2000s and (2) the changes in the Gini coefficient during the global economic crisis, in the second half of the 2000s. This data (OECD, 2012b) originates from the different states in different years, and therefore, the temporal designation is general, and differentiates between the beginning, middle and end of the decade. Therefore, at the moment of observation, all the states are, actually, not at the same distance from the end of the Communist regimes and the economic crisis(es). Yet, the diagram graphically demonstrates that the capability of the states to reduce inequality differs over time. However, it is worth considering that the smaller the initial inequality of the state, the more room there is for the inequality to grow, and vice versa. In most cases, reducing or balancing inequalities requires great changes in the society – either long-term economic growth or decline; changes in the taxation system and reorganisation of social transfers; restructuring of the labour market and economy, etc. Therefore, it is important to interpret the data in these two diagrams within the context of each state. 3.2.3 The working poor in statistics and people’s assessments Several sources provide an overview of the income inequality and poverty in Estonia (Toomse, 2007; Kutsar. 2010; TAI, 2010; Nimmerfeldt, 2012), so that we will not pause here for long. Below, we focus on a special form of poverty – the working poor. Some tend to explain poverty by saying that some people just do not want to work, and if they do not contribute to the production of social benefits by paying taxes, they have no right to get support from the society. Nevertheless, there are people who have such low-paying jobs that their wages do not help them get out of poverty. These people are called the working poor. How large is the proportion of the working poor, by state, and how many people in each state feel that they are being paid less than they deserve? Answers to the first part of the question are provided by the EU-SILC pan-European income survey. The “working poor” are defined as the people who earn 60% of the state’s median income, also taking into account social transfers (pensions, benefits, etc.). It should be considered that this indicator does not measure wealth or poverty, but how low the incomes are, compared to the other residents of the state. Thus, this is a relative, not absolute, yardstick. However, for an answer to the second half of the question – how many people in the state feel that their pay is unjustly small – we turn again to the Social Inequality IV survey (ISSP Research Group, 2013) conducted between 2009 and 2010. The respondents were asked, “Below please assess your pay. Would you say that you earn…” 1- much less than I deserve; 2- less than I deserve; 3- what I deserve; 4- more than I deserve;
5- much more than I deserve. Some dissatisfaction with pay is not necessarily problematic; therefore, in the following analysis, we will only include those who assessed their pay to be much less than I deserve. From the following diagram, it turns out that the percentage of people who are not saved from poverty by working is between 3% and 12%, depending on the state. This indicates quite a large difference, despite the fact that the state’s median income was used for the calculation, so that the proportion of working poor is basically similar. In the course of the economic crisis, the percentage of working poor has increased in about half the states, while in some it has remained comparatively the same. In Switzerland, Austria and Finland, the number of working poor declined during the crisis. The situation in Estonia is illustrated by the fact that, although the proportion of working poor is quite large, it has remained practically unchanged during the economic crisis. Although the states differ, based on the number of actual working poor, this variance is relatively small compared to the differences in the perception of justice (see Figure 3.2.5). It is clear from the diagram that Estonia is among those at the bottom of the rankings, that is, about a quarter of the workers in Estonia feel that they definitely deserve higher pay. A great proportion of people feel this way in Hungary, Poland, Ukraine and Russia, as well as in Chile and Argentina. In these states, the people feel that they are being treated unjustly, since they do not get paid what they think they deserve. The workers in Norway, Denmark, Switzerland, Belgium and Austria take the position that they receive less pay than they deserve, considerably less frequently. These states are characterised by a high standard of labour relations, which means that managers and owners have a respectful attitude toward the needs and expectations of their workers. On the other hand, greater dissatisfaction is also based on the state’s generally poorer quality of life and wage level, which characterises Eastern Europe and South America. Information about the wage levels and working conditions in other states is readily available, and the possibilities for the workers themselves to move, are also uncomplicated. Nevertheless, the studies assert (Magun, 2013) that the transparency of the pay system, and the merited recognition of the worker’s contribution, are of decisive importance in both the growth of the gross domestic product (GDP) and the accompanying increase in the wage level. 3.2.4 Gender inequality and the pay gap The working poor can often have a “woman’s face”, because, in many countries in the world, women are paid less for their work. The gender pay gap is the extent to which women’s pay lags behind the average pay paid to men. Estonia’s gender pay gap is one of the largest in Europe, and due to this great gender inequality, Estonia’s position in international rankings has suffered. However, a great lag in women’s pay is not necessarily characteristic of the post-Communist states. For instance, Slovenia Figure 3.2.6 Gender pay gap in the European countries, 2010. Percentage Slovenia Poland Italy Malta Luxembourg Romania Belgium Portugal Bulgaria Ireland Lithuania Sweden Latvia France Norway Denmark EU 27 Spain Cyprus Hungary Netherlands Switzerland Great Britain Slovakia Finland Greece Germany Austria Czech Republic Estonia Percentage Source: Eurostat 0 5 10 15 20 25 0 5 10 15 20 25 and Poland have the smallest gender pay gaps in Europe, while the gaps in the Czech Republic and Slovakia are large, just like in Estonia. Although, a smaller gender pay gap is usually accompanied by a smaller Gini index, this is not always true. If, on average, the gender pay gap in Europe is between 8% and 18%, in the OECD states, the pay gap is wider – from 10% to 30%. This shows that outside of Europe, in the Asian countries and South America, the gender-based income differences are larger. The largest objectively unexplained pay gaps are in Chile, South Africa and Argentina (Tijdens, Van Klaveren, 2012). Costa Rica, on the other hand, stands out for its less than 10% gender pay gap. How to provide an explanation for women’s low wages? The first possibility is to juxtapose the pay gap Estonian Human Development Report 2012/2013 119
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ESTONIAN HUMAN DEVELOPMENT REPORT 2
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Table of Contents 1 Human Capital /
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Dear Reader Since the moment when E
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1Human Capital Estonian Human Devel
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the HDI’s content has also been h
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Figure 1.1.1 The human development
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Figure 1.1.7 The income sub-index:
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The results of the Princeton Projec
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the hypothetical generation. The to
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Figure 1.2.3 Life expectancy. Eston
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Table 1.2.2 also presents the most
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The new trends that are appearing i
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Figure 1.2.8 Components of populati
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New features were introduced into E
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Initiation of Voluntary Birth Contr
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Table 1.3.1 Best-known educational
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(OECD 2012b). Therefore a certain r
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The reciprocal dependence of the pr
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Figure 1.3.8 Percentage of students
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Table 1.3.4 The quality of educatio
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1.4 Health Raul-Allan Kiivet Change
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Table 1.4.1 Usage of prescription m
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allude to the fact that approximate
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promote healthy lifestyles among th
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Figure 1.5.1 The World Values Surve
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Table 1.5.2 Estonia’s participati
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Figure 1.5.3 The percentage of the
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Figure 1.5.5 Percentage of the Esto
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The fact that Estonia’s position
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Summary Mati Heidmets The global vi
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2People and Society Estonian Human
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Table 2.1.1 Structure of the Bertel
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tioning market economies (15 states
Page 69 and 70: 2.2 Freedom and democracy Martin M
Page 71 and 72: Table 2.2.1 Democracy indicators Po
Page 73 and 74: Figure 2.2.2 The distribution of th
Page 75 and 76: would be something that none of the
Page 77 and 78: political participation are general
Page 79 and 80: strongest, while a very small perce
Page 81 and 82: is concerned, Estonia is one of the
Page 83 and 84: Figure 2.4.2 Average circulation of
Page 85 and 86: 2.5 Corruption Jüri Saar In accord
Page 87 and 88: Lithuania, 61%; and in Russia, 69%.
Page 89 and 90: 2.6.2 Intentional homicides in Esto
Page 91 and 92: crime. And thirdly, there was a wis
Page 93 and 94: References 1. Ahven, A. & Tabur, L.
Page 95 and 96: states included in the EU Kids Onli
Page 97 and 98: 2.8 Public assessments of the state
Page 99 and 100: Figure 2.8.4 Changes releated to tr
Page 101 and 102: of the state’s development are en
Page 103 and 104: Table 2.9.1 The positions of Estoni
Page 105 and 106: 3. IEP (2011). Structures of Peace.
Page 107 and 108: 3Welfare and the Quality of Life Es
Page 109 and 110: choices made, not what people say t
Page 111 and 112: Figure 3.1.5 Public social spending
Page 113 and 114: tion agreed upon the social contrac
Page 115 and 116: References 1. Aidukaite, J. (2006).
Page 117 and 118: hand, to the “inequality of acces
Page 119: and explanations of the extent of i
Page 123 and 124: people in Estonia consider the inco
Page 125 and 126: Table 3.3.1 Experienced Well-Being
Page 127 and 128: at about 70%. In Latvia and Lithuan
Page 129 and 130: sign. It seems that the usual view
Page 131 and 132: 3.4 Quality of life Anu Toots 3.4.1
Page 133 and 134: a uniform composite indicator has n
Page 135 and 136: 3.4.6 The components of life qualit
Page 137 and 138: Figure 3.4.4c Perceived quality of
Page 139 and 140: Figure 3.4.5 Changes in the depriva
Page 141 and 142: 3.5 Environment dimension of well-b
Page 143 and 144: Figure 3.5.1.b Estonia’s position
Page 145 and 146: 3.5.4 Energy intensity The energy i
Page 147 and 148: productivity, which is defined as t
Page 149 and 150: perceive themselves as worse off th
Page 151 and 152: 4The Economy Estonian Human Develop
Page 153 and 154: vide a valuable connection for maki
Page 155 and 156: Figure 4.1.3 Components of economic
Page 157 and 158: ule of law, the sub-indicators for
Page 159 and 160: References 1. Acemoglu, D.; Robinso
Page 161 and 162: Development Report employs generali
Page 163 and 164: and pasture land, and this was capi
Page 165 and 166: Basing the total and net savings re
Page 167 and 168: 4.3 Labour market Reelika Leetmaa,
Page 169 and 170: The problems include the very limit
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• Expenditures for active labour
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who lose their jobs. These ensure i
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4.4 Productivity and the economic s
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labour costs at the company level r
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Table 4.4.4 Comparison of the produ
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Figure 4.4.1 Annual average increas
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4.5 Innovation Erik Terk, Katrin M
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Table 4.5.2 Comparison of innovatio
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Table 4.5.4 Comparison of the indic
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in order to make the R&D potential
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It is characteristic of the South K
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mechanisms for increasing their sta
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Globalisation and Policy Patterns 5
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When Estonia regained its independe
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5.2 The impacts of globalisation an
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Table 5.2.2 Support of the differen
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5.3 Development policies Erik Terk,
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• C -the “Estonia-centred” su
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Figure 5.4.1 Support for the possib
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Summary Erik Terk Estonia is part o
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ehavioural patterns. Therefore, it
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EDR 2012/2013 authors Clemens Buche
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EDR 2012/2013 authors Alari Purju i
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Editor-in-Chief: Mati Heidmets Prod
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