Facts: Poverty in Sweden
Relative poverty, also called low economic standard, is an EU measure that measures how many people have an income that is at a certain distance, more than 60 percent, below the median income in society.
14.7 percent of the Swedish population lives in relative poverty, according to Statistics Sweden’s latest figures from 2020.
The absolute poverty measure, or low income standard, describes how well households’ income is sufficient to pay necessary overheads.
Low income standard means that the income is not enough to pay these living expenses, such as housing, childcare, local travel and so on.
5.2 percent of the Swedish population lives in absolute poverty, according to Statistics Sweden.
Source: Statistics Sweden
Prices have increased on a broad front during the first half of this year, especially food prices have rushed to new record levels. According to Friday’s inflation figures from Statistics Norway, prices in several food groups rose by between 3 and 6 percent in July alone.
Most Swedish households can cope with the price increases relatively well. But for those households that already lived with small – or no – margins before, inflation can be a hard blow.
— Medelsvenssons has had a good economic development for many years and can reduce such consumption which may not be so difficult to reduce, such as reducing the entertainment account or holiday trips, for example. But if those margins don’t exist, you are instead forced to take from life’s necessities, says Björn Halleröd, who is professor of sociology at the University of Gothenburg.
If inflation rises further in the autumn, the situation will become even more vulnerable for those who have had it even tougher financially now, according to Carina Mood, who is professor of sociology at Stockholm University, research leader at the Institute for Future Studies and researches poverty.
Contributions are increased
At the same time, the high inflation has led to the price base amount, which determines the level of various contributions and deductions, being added up extra for next year – the biggest increase in 40 years. However, this surcharge, for example at the highest level in health insurance and the guaranteed pension, is only introduced at the turn of the year.
Compensation from employers in the form of wage increases that cover inflation is also not considered likely, which will lead to real wage reductions for households.
— The price increases that we are seeing now are difficult for many to cope with. If prices increase even more at the same time that incomes do not increase, it is clear that more people will have a tough time financially, says Carina Mood.
Something that could lead to more widespread poverty in Sweden in the autumn. Here, on the other hand, it is important to distinguish between the different definitions of poverty, Carina Mood emphasizes.
Today, the so-called relative poverty measure is commonly used, an EU measure that measures how many people have an income that is at a certain distance (more than 60 percent) below the median income in society.
Relative poverty is not affected
Since the relative poverty measure is related to income levels, the number counted as poor will most likely not be affected, according to Björn Halleröd.
— More people will not become poor in that sense unless unemployment increases. However, more people will find it difficult to consume as they are used to, and in a way that most others take as normal, he says.
It may even happen that poverty on paper may instead decrease, if one starts from the relative poverty measure. This is if real incomes are affected more in the middle of the distribution than at the bottom, which leads to the poverty line being lowered and the distances in the lower part of the income distribution decreasing, according to Carina Mood.
She believes that other measures of poverty are more fair, such as those that measure economic deprivation, or lack of resources. It means that the person in question may not be able to afford to pay their bills, heat their home, eat good, cooked meals every day or change their clothes.
Another measure is based on annual income, where you measure whether the person on an annual basis has an income that is sufficient for a certain basket of goods and services.
More will become poor
If the prices of the goods in that basket increase as they have now, and incomes do not increase at the same rate, more people will become poor, according to Carina Mood.
— When you measure with these other measures, we will most likely see an increase in poverty in Sweden.
However, whether this means that economic inequality will also increase is not entirely clear.
When both the rich and the poor can afford less, economic inequality will be the same. However, poverty can increase drastically when those at the bottom of the income distribution cannot afford the most essential things in life, according to Carina Mood.
“At the same time, it is possible that inequality may even decrease because in recent times it has been driven a lot by capital income, and now the value of assets, such as real estate and shares, is decreasing,” she says.
The Swedish economy is also expected to enter a recession next year, according to the Swedish Economic Institute’s latest forecast. Something that will then hit the labor market, which is currently still going strong.
“If unemployment then increases, the gaps usually become larger as well,” says Björn Halleröd.