More than a fifth of households in the Czech Republic are below the EU’s uniform income poverty line, taking prices and purchasing power into account, and the Czech middle class is similar to the poor in Luxembourg or Austria, according to a study by the PAQ Research agency released yesterday.
The currently valid income poverty line corresponds to 60% of the median income in a given country. In the Czech Republic, 9.8% of the country’s population are below the line, the lowest share of the poor in the EU in the long term. However, according to PAQ, these figures are not indicative, and the situation across the EU is better reflected by the uniform European median income, taking into account the purchasing power of individual countries.
“The median household income in countries such as Luxembourg, Austria and Ireland is roughly 1.9 times higher than in the Czech Republic and three times higher than in Bulgaria. The poor in Luxembourg or Austria – households below 60% of the national median – therefore have significantly better incomes and living standards than the average person in Bulgaria. And they are roughly on a par with Czech middle-income households,” the agency said.
PAQ said the EU’s uniform relative poverty line shows the real differences between western and new member states, and also shows that the difference in prices should be taken into account when comparing living standards. This makes it clear how much people can buy for the same unit in different countries, the experts explained.
According to the currently used indicator, about 10% of Czech adults are below the income poverty line, compared to an EU average of 16%.
Taking into account the uniform EU income threshold for prices and purchasing power, almost 22% of households in the Czech Republic are poor. The EU average is 19%. In this respect, the Czech Republic is better off than Portugal and Greece and all the other post-communist countries except Slovenia, according to PAQ.
PAQ says the current indicator of income poverty is confusing and has implications, including an influence on Czech social policy. But it also puts post-communist countries at disadvantage in the distribution of EU funds, the experts said.
“Paradoxically, (EU subsidies) may go to relatively poorer regions of rich countries instead of significantly poorer countries overall,” the authors of the study said.
They argued that the poverty line in the Czech Republic should be CZK 19,500, based on the European median household income with prices taken into account. Under the current indicator, it rose by CZK 1,389 to CZK 18,163 last year compared to the year before, according to the Czech Statistical Office’s data.
