The poverty risk threshold for last year for a family of four, with two adults and two children, was 7.070 euros per year or 590 euros per month. In 2022, the monthly amount of the poverty threshold for a family of four was 451 euros, and in 2021 it was 397 euros, according to Monstat's comparative research on income and living conditions (EU-SILC).
These comparative data show that families need more and more money to avoid the risk of poverty, and that the poverty line is growing faster than income and inflation. The average salary increased by 12 percent last year, while the average inflation in 2023 compared to 2022 was eight percent.
Monstat data show that 20,1 percent of families in 2023 had disposable income below the poverty risk threshold. This is only slightly less than in 2022, when that percentage was 20,3 percent.
Social assistance is growing the slowest
Far below the poverty threshold are the beneficiaries of the material security of the family, which, depending on the number of members, now amounts to 88 to 170 euros. The members of these families must be unable to work, have no other income or property from which they can generate income, that is, by law, they are considered the poorest part of society.
For a family of four, the material security of the family now amounts to 153 euros, that is, it is almost four times less than the poverty threshold for a family with the same number of members. The amount of material security is adjusted twice a year in January and July with a 50 percent increase in inflation and a 50 percent increase in gross wages, so that, for example, the January adjustment was only 3,5 percent. The adjustment of the amount of this type of assistance has grown at a lower percentage in recent years than the average net salary and the average pension.
According to data from the Ministry of Social Welfare, 5.380 families with 18 members received material family support for July, which is about three percent of the population. 712 thousand euros were needed for the payment of this type of assistance in July. In relation to the population, the most beneficiaries of this aid are in Rožaje, where every sixth family "lives" on material security.
The story of changing the law has been going on for two years
The Ministry of Social Welfare has been announcing changes to this law for two years in order to significantly increase this type of assistance, but also to check the status of current beneficiaries. The same is now written in the Fiscal Strategy, which the Government sent to the Parliament for adoption last week.
"The passing of the new Law on Social and Child Protection, which will primarily aim to identify services in the field of social and child protection that need to be developed, as well as to prescribe conditions for better targeting of beneficiaries of material family security, in order to consider the possibility of increasing the amount of benefits" , stated in the part of the strategy that refers to the activity plan for the period until 2027.
The total amount in the budget for all forms of social assistance, according to the same strategy, this year amounts to 212 million, while for the next three years in 2027, it would grow to 229 million, that is, for a total of eight percent for that entire period.
Below the minimum wage and pension threshold
Beneficiaries of the minimum pension, which then amounted to 296 euros, were significantly below the poverty threshold last year, but even with the increase to 450 euros, those who support their families with that amount are now below that limit.
Below the poverty threshold last year but also this year are employees who work for a minimum wage of 450 euros, including those for whom it is 30 percent higher (up to the amount of 590 euros) if they are supporting their family with it.
Even with the increase of the minimum wage next year to 600 euros, their families will be below the poverty threshold if the new limit increases by more than 1,7 percent this year and next.
Last year, the poverty threshold in Montenegro, according to Monstat data, increased by 30,8 percent, from 451 to 590 euros. In 2023, compared to 2021, it was increased by 48 percent.
By definition, the EU-SILC survey is, at the level of the European Union, a mandatory source for monitoring income, poverty and social exclusion statistics, in order to provide comparable data for each country separately and at the level of the EU as a whole. In Montenegro, this research, based on the EU methodology, has been applied since 2013, when the previous poverty line stopped being calculated.
"The data collected through this research is the basis for calculating indicators of poverty and social exclusion for Montenegro. The indicators are based on the concept of relative poverty, which takes into account the disposable income of the household, the number of members in the household (household size) and the distribution of income within the population", stated Monstat in this research.
The growth of minimum wages and pensions reduced inequality
The fact that minimum wages and pensions have been growing at higher rates in recent years compared to the average, has influenced the reduction of inequality through the Gini coefficient and the quintile ratio.
The Gini coefficient is an indicator of income inequality (a scale of zero would be complete equality, and a scale of 100 would be complete inequality), that is, the smaller the differences in income between citizens, the lower this coefficient. In Montenegro, it was 2023 in 29,4 and has been in constant decline for the past five years.
In 2019, it was 34,1, and then it decreased, so it was 32,9, 32,5, and 2022 in 31,5.
In the European Union, this coefficient has an average of 29,6. Bulgaria has the highest inequality, because last year they had a coefficient of 37,2, and Slovakia has the smallest inequality, where this coefficient is 21,6.
The quintile ratio shows the difference between the richest 20 percent and the poorest 20 percent. The quintile number in Montenegro last year was 5,1, which shows that the 20% of the population with the highest income earned five times more than the 20% of the population with the lowest income.
At the EU level, that number was 4,72, that is, the difference between the richest and the poorest is smaller.
The biggest difference according to this criterion is in Bulgaria, where the richest 20 percent have incomes 6,61 times higher than the poorest 20 percent.
Slovenia has the best relationship among EU members, where the richest group has 3,34 times more income than the poorest.
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