Income and Living Conditions in Albania

INSTAT publishes for the first time the main results of Income and Living Conditions Survey (EU-SILC) that measures living conditions, relative poverty and material deprivation in Albanian households.

This survey is fully in accordance with the Eurostat methodology and the methodology used by all other EU member states. The survey is the basic source for comparable statistics on income distribution and social exclusion at European level. The EU-SILC survey is conducted on annual basis in all EU Members States as well as in all the candidate countries.

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14-12-2022 Income and Living Conditions in Albania2021
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The Survey on Income and Living Conditions is conducted in 2017 for the first time in Albania. The results present comparable statistics to other countries as well as provide reliable data in the area of relative poverty, social exclusion and household income, helping policymakers in the policies designing for reducing poverty.

Until 2012, the only source for measuring living conditions, absolute poverty and well-being of Albanian households it was the Living Standard Measurement Survey known as LSMS. This survey collected a variety of monetary and non-monetary indicators and provided a variety of information to different users. The LSMS aimed to measure poverty based on consumption using the absolute poverty line. Given the methodological changes used in these two surveys, it is expected that the information from Income and Living Conditions Survey will be different compared to the data provided by the Living Standard Measurement Survey.

Coverage: EU-SILC Survey covers all households of the Republic of Albania territory regardless of their size or socio-economic characteristics. The following are excluded from the survey: Population living in institutional households of all types (dormitories, elderly homes, hospitals, prisons, rehabilitation center’s, camps, etc.).

Household concept: is referred to a group of people, a related person or not, who live together in the same dwelling or in a part of the house and share a partial or common economy.

Sample size: In 2020, the survey was conducted on a final sample of 8.878, in 2019 8.380 households, in 2018 7.800 households and in 2017 the sample was 7.582 households. Reference period: is different depending on types of information collected: o Incomes: is the last calendar year - N - 1 (for SILC 2020 is 2019, for SILC 2019 is 2018, for SILC 2018 is 2017 and for SILC 2017 is 2019).

Material deprivation: is the moment when the interview is conducted - (Year 2017, 2018 , 2019 and 2020) According to the methodology for measuring poverty, the poverty line is calculated based on its relative concept (poor in relation to others) and is defined at 60% of the median total equivalised disposable income of the household, using the modified OECD equivalised scale. Total equivalised disposable income of the household is considered the total net income (that is, income after taxes and social contributions) received by all household members.

Equivalised income: As equivalised disposable income of the individual is considered the total disposable income of household after being divided by the equivalent size of household. In the income distribution per person each household member possesses the same amount of income, corresponding to the equivalent disposable income of the household. This means that each member of the household enjoys the same level of living. Consequently, in the income distribution per person, the income that is attributed to each person does not represent wages but, actually, an indicator of the level of living.

Equivalence scale

Equivalent size refers to the OECD modified scale which gives a weight of 1.0 to the first adult (over 14 years old), 0.5 to other persons aged 14 or over who are living in the household and 0.3 to each child aged under 14. Example: The income of household with two adults and two children under 14 years is divided with a weight 1+0.5+2*0.3= 2.1, for household with two adults is 1 + 0.5 = 1.5, etc.

The indicators of at risk of poverty and social exclusion are based on the concept of relative poverty, which takes into account household disposable income, number of household members, and income distribution of the total population.

The main indicator definitions:

At-risk-of-poverty threshold represents the lowest annual disposable income that a person would not be considered at risk of poverty. At-risk-of-poverty threshold is defined as 60% of the median equivalised disposable income for all households.

The at-risk-of-poverty rate indicates the percentage of persons living in households where equivalent disposable income is below the at-risk-of-poverty.

Material deprivation indicates the level of living of the population by the material deprivation rate, or the proportion of materially deprived persons.

Severe materially deprived persons are those living in household who cannot afford at least four of the nine categories of material deprivation related to assets, living conditions or financial aspects.

The nine items of material deprivation are:

  1. Arrears on mortgage or rent payments, utility bills, hire purchase instalments or other loan payments;
  2. Capacity to afford paying for one week's annual holiday away from home;
  3. Capacity to afford a meal with meat, chicken, fish (or vegetarian equivalent) every second day;
  4. Capacity to face unexpected but necessary expenses of 30.000 ALL;
  5. Household cannot afford a telephone (including mobile phone);
  6. Household cannot afford a colour TV;
  7. Household cannot afford a washing machine;
  8. Household cannot afford a car and;
  9. Capacity to afford keeping home adequately warm;

The work intensity of the household is defined as the ratio of the number of months that all household members have been working during the income reference year to the total number of months that could have theoretically worked during the same period (12 months).

A person is considered economically active when he/she is 18- 59 years old by excluding people who are depending on household and belong to the age group 18-24. The work intensity is: very low (0 %- 20 %), low (20 % - 45 %), medium (45 % - 55 %), high (55 % - 85 %) and very high (85 % - 100 %).

Very low work intensity refers to the situation of persons in the household where no one works, or works very little, meaning that working-age household members work less than 20% of the total number of months they could work during the reference period.

At Risk of Poverty or Social Exclusion refers to the individuals who are at risk of poverty or severe materially deprived or living in a household with very low work intensity.