Families in Riga live worse than in Tallinn and Vilnius

Incomes in all three Baltic capitals have increased over the past three years – since 2021, the average salary in Riga, Vilnius and Tallinn has increased significantly, but the growth has not been uniform.

In terms of following-tax income, assuming a family with two children and both parents earning an average salary, the most significant increase over the past three years was in Vilnius, where take-home pay increased by 42%. In Riga this figure was 29%, in Tallinn – 24%.

However, family income is affected not only by take-home pay, but also by child benefits in each country, the bank notes. In this sense, Lithuania is the leader, where the monthly allowance for two children is 192 euros. In Estonia it is 160 euros, and in Latvia it is 100 euros. However, in Lithuania, the child benefit completely replaces the income tax benefit for dependents, which in Latvia is applied monthly to salary, and in Estonia – annually as a refund of overpaid tax. Thus, the amount of income that remains with the family following receiving benefits and paying taxes differs significantly in Tallinn, Vilnius and Riga – 3576, 3127 and 2655 euros, respectively.

Since the last survey in 2021, these differences have become even more noticeable, as incomes have grown faster in Lithuania, says Evija Kropa, head of financial literacy at Swedbank.

At the same time, if we consider the same food basket in the Baltic countries, the most expensive food products this year were in Tallinn, where a balanced food basket for a family with two adults and two children costs 737 euros per month. Next comes Riga – 640 euros, and the cheapest food products are in Vilnius, where a similar grocery basket costs 544 euros per month.

Food expenses account for a significant share of household income: 24% in Riga, 21% in Tallinn and 17% in Vilnius.

“We can say with confidence that the increase in the cost of food over the past three years has been felt by absolutely all residents of all the Baltic countries, but the growth was different. The food basket has increased in price the most in Tallinn – by 38%, in Riga – by 32%, and the least in Vilnius – by 23%. Since this is one of the largest and most important items of expenditure for families, the impact on their budget is just as significant. more moderate. Thus, the mere factor of a higher income in Tallinn does not guarantee an immediate improvement in living conditions,” notes Kropa.

According to the bank, families living in Riga face the highest housing costs – 288 euros per month. In Tallinn they are 260 euros, in Vilnius – 209 euros per month. Compared to 2021, this year the expenses of Riga residents increased the most – by 108 euros. In Tallinn the increase was 87 euros, in Vilnius – 85 euros.

“In almost all areas, except electricity, Riga has the highest housing costs among the Baltic capitals. In addition, Riga families have to pay property taxes, which families in Tallinn and Vilnius do not pay at all. The problem of shared ownership also remains relevant, since Many apartment owners in Riga, in addition to property taxes, also pay land rent,” says Kropa.

If we assume that a family travels only by public transport, and compare these costs between capitals, then for the first time in the history of the study, Riga ceased to be a leader. In Riga, families have to spend 60 euros per month on public transport, in Vilnius – 64 euros, and in Tallinn public transport is free.

An analysis of the three main items of expenditure for a family living in one of the three Baltic capitals shows that Riga has lost the status of the most expensive capital to Tallinn.

According to Swedbank, three main expenses – food, housing and transport – cost a Tallinn family 997 euros per month, a Riga family 988 euros, and a Vilnius family 817 euros.

Due to the difference in income, Riga families have the least money left for other needs following covering the three main expenses. If we assume that in a family with two children both parents receive an average salary, then for other needs – clothing, household goods, healthcare, education, entertainment, etc. – Tallinn families have almost twice as much money left (2579 euros) than Riga families (1667 euros), while those from Vilnius – 2309 euros.